I caught this last night right before I went to sleep (ahh, the bedtime reading choices of a real estate reporter) and had to share it. David Leonhardt, who’s a great economic mind commentating for The New York Times, takes the shame out of being confused about how risky mortgages could bring down the nation’s economy.
“Can’t grasp credit crisis? Join the club,” Leonhardt says today in his must-read column, which travels through the recent shift in the economy to fund mortgages with global capital, and explains why foreclosures among a relatively small percentage of the home-owning population effects the kind of meltdown we’ve seen on Wall Street lately. Check it out here.
And while we’re clearing things up, there’s a thought out there today that foreclosures didn’t increase by as much in February as they did in January.
First, a reminder of that January spike, from our most recent DataParty:
Meanwhile, national foreclosure tracker RealtyTrac reported Tuesday that San Diego County foreclosure activity rose 20 percent between December and January. The foreclosure filings recorded in January numbered 5,428 last month, a 165 percent spike from January 2007. Filings count all records associated with a foreclosure — default notices, auction sales notices and bank repossessions.
Last week, RealtyTrac reported February’s foreclosure filings reached a 4,728 total, up 177 percent from February 2007, but a technical 13 percent drop from January.
What’s misleading about that? The foreclosure rate is still record-setting, but it didn’t surpass January, right?
But over in Nerd’s Eye View, Rich Toscano has an excellent explanation for the apparent slowdown, which actually doesn’t seem to be a slowdown at all. (Note: Toscano uses different numbers than the RealtyTrac data, but the concept is still the same). Here’s the bit I was talking about:
But comparing month-to-month totals is always tricky when the shortened month of February is involved. This particular February contained 21 business days — 8.6 percent fewer than January. February’s NOD and NOT counts were, respectively, 2.6 percent and 4.3 percent less than January’s. So the pace of foreclosure activity per business day was actually higher in February than in January or, for that matter, ever.