According to this WCBSTV report, foreclosures in NYC are likely to continue to climb. The number of foreclosed homes in NY hit a three year high which increased 13% from July to August. Queens is the hardest hit borough.

According to data from PropertyShark.com, Queens had 254 foreclosures last month which was a 113 percent increase from last year.

Manhattan, by contrast, saw few foreclosures last month, but again, shown by the purple markers, there are more on the horizon.

Experts say home prices are destined to fall, even in Manhattan, until they reach a level where investors will rush in.

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Los Angeles and Miami actually saw diminished numbers of foreclosures. Experts say that's because the prices in those markets have fallen far enough for buyers to bite. In some cases, houses are selling for half of their former purchase price.

 As noted before on this blog, the NYC Metro area is the least affordable housing market in the nation. Since the inception of that index in 1991, the top spot has always gone to some area in California. But with housing prices already correcting in those areas, while prices in the NYC area have only dropped a small amount in relation to the drop in sales, NYC recently took over.

Prices are likely to correct here too in similar numbers. By looking at what prices the banks have been letting foreclosures go for at auction, usualy at huge discounts against peak pricing and even less than the foreclosure judgments, along with the large amount of inventory and tighter credit, it doesn't seem likely that prices will be able to defy traditional market forces much longer.

Of the 30 properties scheduled for aution at the Bergen County Sheriff's Foreclosure Auction last Friday, only 12 made it to the auction block. Two were sold and both of the highest bids were below the judgment and last sale price. Continuing the trend of recent foreclosure sales at Bergen County foreclosure auctions.

128 Oakland Street, Englewood, NJ - Appears to be a cape built in 1943 on a 50x120' lot. In 1994 it was purchased for $119,000 then sold in 2006 for $335,000. The highest bid at auction was for $199,000 by "128 OAKLAND LAND TRUST, CAROLYN BLOISO AS TRUSTEE", a name we've seen before. The winning bid was 32% below the foreclosure judgment of $294,459.45 and 40% below the previous sales price.

316 Cambridge Drive, Ramsey, NJ - A unit in a townhome development built in 1993. The first sale was in 1992 for $191,000. It was then sold in 2005 for $484,000. Last Friday's winning bid of $316,000 by Eric Silverman was 20% below the foreclosure judgment of $398,869.01 and 34% below the 2005 sales price.

NJ's largest home builder (6th largest in the nation) Hovnanian Enterprises has posted it's eighth straight quarter in the red due to the current state of the real estate and credit markets according to this report from The Times of Trenton.

It's stock price tumbled in July of 2007. It was trading in the low to mid 20's when it was first listed and is currently about $6.50 after recovering from it's ultra low of $4.99 in early July, 2008. The last dividend check to go out to shareholders was in September of 2007.  "In May, Hovnanian sold $133 million in shares and raised $600 million by selling five-year notes, its biggest one-day sale ever. The company used the proceeds to reduce a $900 million credit facility to $300 million. "

Hovnanian and other large home builders are struggling to sell homes in the worst housing slump in a quarter-century as financing gets tougher for potential buyers and foreclosures add to a glut of unsold properties.

Three-quarters of lending banks tightened credit for prime borrowers in the second quarter, according to the Federal Reserve, and 23 percent fewer home loans will be issued in 2008 compared with last year, the Mortgage Bankers Association said. Foreclosures rose 55 percent in July, RealtyTrac reported.

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Hovnanian reduced its number of unsold houses 46 percent at the end of April from a year earlier and has not bought any land or started any new communities, according to chief financial officer Larry Sorsby.

Back when the loses started for Hovnanian, they started reducing prices by 25% to sell off some of their inventory. According to this report in USA Today the company claimed a "huge success" with their sales efforts, but as we can see now, the results weren't enough to buoy this company out of troubled waters.

One industry expert said of the sale:

"It does suggest that if the market is priced right ... that you can get a response out of potential buyers," said Keith Gumbinger, vice president of HSH Associates, a consumer loan research firm in Pompton Plains. "Two-thirds of a quarter's sales done in a three-day period is pretty good."

So back in 2007 an industry expert believed that 25% off was "priced right". What does that mean for houses today as credit has become tighter, inventory is still high and sales are falling?

Other builders in the nation are not doing any better according to this article on SignOnSanDiego.com.

At Magnolia at Bressi Ranch in Carlsbad, about half of the 25 homes have been built and sold for prices approaching $2.3 million. But a few months ago, builder Barratt American abruptly halted construction on six more, and a seventh stands completed and unsold. Work never started on five lots.

The reason: The locally based builder, like many home owners, lost its financing – in this case, a $125 million line of credit from Bank of America on 10 projects in San Diego, Riverside and San Bernardino counties – and is facing foreclosure.

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These are desperate times for San Diego County's once-high-flying home builders, who ramped up production of ever-more-expensive homes during the 1997-2005 boom.

Today, virtually no one is showing up at model-home complexes. More than 40 percent of buyers canceled their purchases in July, according to one market research firm. And builders and developers have cut their staffs by as much as 90 percent.

Just a few years ago, this turn of events would have seemed shocking. But in retrospect, it is not surprising given the cyclical nature of real estate. Builders, like buyers, just forgot that the good times inevitably lead to bad times. And this appears to be one of the worst.

Cyclical nature of real estate!?!?! WTF?!?!?!?! House prices always go up! Obviously this guy hasn't been listening to the propoganda, I mean (surround) sound advice from his Realtor buddies.