Notices of Default Cause for Concern
So says Ms. Appleton-Young. Go ahead and have yourself a little panic attack. The experts have spoken.
"The steady increase in the number of people who have missed mortgage payments and received notices of default is cause for concern, Appleton-Young said."
"The number of California homeowners who fell behind on mortgage payments more than doubled during the last three months of 2006, pushing defaults higher than at any other time in the past eight years, according to an analysis by DataQuick Information Systems that was released last month."
'"You do have people, especially those who purchased in 2006 and 2005, who missed the big cushion of appreciation, who could get into trouble," she said.
"Scraping together enough money to buy a house was particularly difficult for first-time buyers.
People purchasing their first home were four times more likely to take out a loan with nothing down than repeat buyers, according to the report. About 40 percent of first-time buyers opted for loans without down payments."'
"But even as many first-time buyers showed a willingness to take on higher debt, the overall percentage of first-time buyers fell, reaching its second-lowest level on record."
"Still, Leslie Appleton-Young, chief economist for the California Association of Realtors, pointed out that buyers are taking on a high debt load at the same time that foreclosure rates are rising."
'"Buyers are really straining," said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. "The prices have really become unaffordable in a traditional sense and the only way some people are able to buy is to become more heavily indebted and put less down. That's a scary sign."'
"The market is going to have to find a way to add new buyers," said Ed Leamer, director of the UCLA Anderson Forecast.
"That's another symptom of a market gone awry."
The report also found that sellers profited less in 2006 than in 2005. The median net cash gain dropped 8.4 percent the first decline in nine years.
"As economists are scouring data on the housing market, searching for evidence that the market is bouncing back, the report offered little to celebrate, Leamer said. "We're looking for some signs that the problems in the housing market are behind us," he said. "Nothing in this report supports that."'
"There could be trouble ahead in California's housing market as buyers are going deeper into debt while sellers are seeing less profit."
"More than 21 percent of buyers last year took out mortgages with no down payment, soaring from just 4.5 percent in 2000, according to the California Association of Realtors, the industry's trade group."
"The findings suggest that buyers are taking on more debt at a time when the market both statewide and in the Bay Area is slowing. The number of homes sold in the Bay Area dropped 19 percent last year compared with 2005."