The latest data on mortgagee properties being repossessed by lenders and marketed for sale indicates that the trend is on the way down. Whilst far from returning to normal levels the extent of mortgagee properties on the market has declined over the first quarter of 2010.
As seen from the chart below the peak of mortgagee listings on the market was at the end of 2008, just at the peak of the global recession. Through 2009 a patchy decline was observed with a significant clearance through the year end of 2009. Since the start of this year the market has seen a new selection of mortgagee properties come onto the market, however this has not been to the extend of the levels seen through 2009. As at this time there are some 309 mortgagee properties comprising homes and lifestyle properties on the market.
These statistics of listings are also reflected in the latest data of mortgagee sales released by Terralink International. The data compiled in the monthly report cover sales of properties of all types that have been sold on behalf of the lender as a statutory mortgagee sale, they can and do include non residential properties.
Sales for January totaled 196 down from the December total of 252, but still up 30% on the total sales in January 2009. However when adjusted for seasonality the sales for January reflect a slow decline which began in October 2009 following the peak of seasonally adjusted sales in September of 336 – the seasonally adjusted sales for January 2010 was 232 as highlighted in the chart below.
The final measure of mortgagee activity can be seen by examining the extent of searches undertaken on realestate.co.nz for mortgagee properties. Mortgagee properties are not a defined category of listings and therefore are found within the 120,000 listings on the site through the keyword searching. The chart below shows the level of keyword searches for such terms of “mortgagee”, “mortgagee auction”, and “mortgagee sale” on a weekly basis since the start of 2008. Very clearly the level of activity were considerably more active back in 2009, with the past 6 months showing a very stable level of around 600 to 700 searches a week.
I think that the fact that peak mortgagee listings coincided with the nadir of the recession is largely a coincidence as you would expect mortgagee listings to lag the economy by at-least 6-9mths (being the usual time it takes for a borrower default to translate into a mortgagee listing).
There’s also the mix of properties to consider. The earlier volume could consist more of apartments and finance company developments gone south whereas more recent mortgagee listings may well be owner occupied homes.
The bounce in property prices during the second half of 2009 would also have helped things as defaulting borrowers (pre-mortgagee sale listing) would have a greater chance of selling their house on the open market at a price high enough to clear the bank debt.
MarkyMark,
I would completely agree – I think the first wave of mortgagee was our “own recession in property” as apartments were liquidated when finance companies started going to the wall and the unsold properties were placed through receivers, subsequent there has been a steady trickle of the owners having to face the impact of low start interest rate mortgages.
I also agree that like unemployment – the return to normality comes as a lag of the state of the economy and we are still seeing 150+ per month mortgagee sales, some 3 times the norm. However I think the peak is past – unless we falter in the economic recovery.