A Close Look at Studio City Foreclosure Trends

As the summer wheels continue to churn forward, my focus intensifies on foreclosure trends in my local market here in Studio City, CA, home base for my real estate firm, Equitable Realty & Services.    Through the scope of my Economics Degree, I’m always looking for signs of growth and increased productivity, as the market continues to search for ways to heal itself.  Political innovations, like the recent passing of the California Homeowner Bill of Rights, or the Mortgage Forgiveness Debt Relief Act of 2007 [which I bring up now only because it is currently set to expire December 31, 2012], are also given their due attention for their immediate impact on the local and national recovery process.

For such real estate data research, I can always rely on the published works of RealtyTrac Inc., a leader of the online marketplace in collecting and aggregating foreclosure data worldwide since its inception in 1996.  I encourage anyone who shares my similar interests on these issues to visit RealtyTrac at www.realtytrac.com .  There you will find helpful statistics, even graph analytics like the caption below. 

Foreclosure Activity and 30-Year Interest Rate - Studio City, CA

As you can see, this graph shows a steady decline in foreclosure activity in Studio City Real Estate since September of last year, providing a much needed confidence boost to eager realtors, investors, and homeowners looking on.  Studies on both state and national levels show similar trends.  But does this contained study provide enough statistical evidence to show the prolonged real estate and economic downturn is behind us.  Asked differently, is the market trajectory truly on the path of recovery?   The answer may be right here on this very same graph. 

If you look at a historical graph of interest rates and recessions, you will nearly always observe recessions correspond with low rates.  Interest rates, as you know, can be regarded as the price of borrowing money.  Behaving similarly to normal commodities, pricing levels have direct correlation to a commodity’s demand.  Increased demand puts upward pressure on price, with the latter increasing until a new equilibrium is reached, and at a higher price.  This is Economics 101 people. 

The Federal Reserve continues to dive into their monetary policy arsenal, doing their part to keep both short-term and long-term rates low to encourage business, spending, and investment.  Fed Chairman Ben Bernake uphold the policy committee’s aim to maintain such measures until the end of 2014, at least for the time being.  From a housing perspective, the historically low rates will help awaken business and fight the foreclosure crisis head on. With the price of borrowing cheaper, target areas of first-time home buying, new construction, refinance and real estate investment will all receive a shot in the arm.  When normalcy in the market is restored, it will be strong enough to support interest rate increases. 

So, not until I see both the foreclosure trend downward and interest rates upward can I truly maintain that the economy has pulled through the worst of it.