‘Seasonality Disorder’ In The Housing Market?
Credit research company TransUnion has just released a report that shows mortgage loan delinquencies have increased and are up for the 12th quarter in a row. RealtyTrac predicts the number of foreclosures will increase to three million in 2010. Some experts see this number as conservative. The total unemployment number is also expected to rise along with higher fuel, food and housing costs.
The number of borrowers who are 60 days or more delinquent on their mortgage loan increased from 6.25% to 6.89% in the third quarter. Also worth noting, according to TranUnion, the number of Americans delinquent on mortgage payments but are current on credit card debt payments increased 68% from the third quarter of 2007 to the third quarter of 2009. The occasion is also marked with the culmination of three quarters of consecutive deceleration in mortgage delinquency emergence.
According to F.J. Guarrera, Vice President of the TransUnion financial services business unit, “At the national level, these results are in part due to seasonality effects, adding, consumers tend to run low on cash at the end of the year, after spending for the holidays, but before receiving year-end bonuses and tax refunds”.
To some degree this is true. In an upward moving economy we would see conditions that matched what Mr. Guarrera is saying, but this is not an upward moving economy. In this economy when we see numbers that show a downward moving trend we need to take notice and make adjustments.
People are not resisting the urge to purchase a new home because they feel broke from the excess of the holidays. According to the numbers recorded over the holidays, most consumers were spending cash only and looking for bargains if they were shopping at all. This is not a seasonality disorder in the housing market, this is a housing crisis.
Whether consumers will have additional access to cash during the first half of 2010 is unlikely. Bonuses and tax refunds are being reserved for those who could afford to pay taxes and earn bonuses over the past year. For most it was a decrease in wages, the unemployment line or no prospects at all. Consumers ability to borrow from banks has decreased more and more over the past year as well, forcing President Obama to offer incentives to small banks to encourage lending.
Based on the information that has been released since January 1, 2010, the housing market has little hope of improving. The data that will be released based on the first quarter numbers will show a possible increase in activity due to the encroaching deadline of the first time home buyer tax credit extension. Beyond those influences, the first quarter housing market numbers for 2010 will be very interesting.
Related posts:
- Bernanke Expects Housing Recovery
- Fed Says Growth Likely To Return
- California Housing Woes To Continue
- Pending Home Sales Drop, Market Looks Bleak
- Is The Canadian Housing Market Sustainable?
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