INDUSTRY EXPERTS ARE KEEPING A CLOSE EYE ON the volatile foreclosure market, hoping that the high numbers being reported aren't a sign of future troubles. For the month of March, Florida-based Foreclosure.com reported a 50 percent increase in new foreclosure inventory listed for sale over February.
“This is not a period when we'd expect to see foreclosures,” says NAHB economist Michael Carliner. “Everything should be pushing things the opposite way. We have improved employment and increased prices. Low interest rates don't suggest foreclosures. If we start seeing a lot of them now, it would be surprising and disturbing.”
By May, the number of foreclosures on the market had dipped 4 percent, but the 74,011 houses up for sale still reflected an extremely high number, says Marla Webb, senior adviser for Foreclosure.com.
“It's a volatile ... situation,” Webb says. “Across the board, even allowing for normal fluctuations, things are higher than we'd like to see. ... There are a lot of ‘edge-of-the-chasm' situations out there, and not just in the [lower-income brackets].”
Both Webb and consumer debt expert Howard Dvorkin attribute the increase to people who overextended themselves, using ARMs and interest-only mortgages, and couldn't afford the increased payments when interest rates went up even slightly.
“We're getting swamped with calls,” says Dvorkin, president of Florida-based nonprofit Consolidated Credit Counseling. “It's a very scary thing. The people on the edge are going to get killed.”
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Learn more about markets featured in this article: Orlando, FL.