RealtyTrac released their monthly foreclosure report this week showing that default notices rose to 205,990; a 9% month over month increase from April to May. The chart below shows this recent jump higher after foreclosures fell significantly in November 2010 and have stayed low for 18 months following the robo-signing scandal:
Is this the beginning of the final wash out? We will have to track the data moving forward to see. The banks have held a massive amount of inventory off the market for close to two years, and it will need to be flushed through the system before the United States can find the true bottom in home prices.
The final move down will once again surprise those that have turned bullish. It will also create a mood of maximum pessimism in the market where quotes such as "home prices will always fall" and it is "always better to rent" will become common place among dinner parties and water coolers.
This will be one of the best times to purchase real estate for this generation. Stay patient. I will continue to track the foreclosure reports monthly here.