Given the explosive growth Maricopa County's Trustee Sale Notices saw in the second half of 2006, the numbers for the first four months of 2007 have seemed somewhat like a plateau. April’s total was 11 below March’s 1720, leading me to seriously wonder what the future holds.
From a recent Reuters article:
Subprime mortgages to less creditworthy borrowers comprised only 13.7 percent of outstanding U.S. mortgage debt in the fourth quarter of 2006, and their delinquency rate was 13.3 percent, according to the Mortgage Bankers Association.
If, like the article, you believe that the woes of the subprime mortgage market are “well contained,” then perhaps we have a hint of what the remainder of 2007 has in store.
Assume, for (extreme) simplicity’s sake, that...
1) All 1,250,231 houses in Maricopa County have a mortgage, and
2) The percentages quoted above remain the same for all of 2007, and
3) No one who does not have a subprime loan will become delinquent,
... then that means the average number of Phoenix-area trustee sale notices per month should come to 1898. I’m inclined to take it as a good sign that we’ve only seen a peak of 1720 so far, in spite of Mish’s contention, over at his Global Economic Trend Analysis, that containment is spreading.
However, the graph below, far more than Mish’s falling sky pronouncements, gives me pause:
Trustee’s Sale Notices are a lagging indicator, since they don't happen until the borrower has been in big trouble for several months. That fact, in conjunction with the data behind the Credit Suisse graph, leads me to believe that late 2007 through early 2008 (and beyond) is when we should be expecting the big wave to hit. How big? Who can say?