Meanwhile, ForeclosureS.com has reported that foreclosure activity in several Western markets rose sharply in the second quarter after a first-quarter dip."Year over year, at the end of the second quarter of 2006, foreclosure activity in California has increased more than 67%," said Alexis McGee, president of the Fair Oaks, Calif.-based investment advisory firm. She added that defaults were also rising in formerly hot housing markets such as Las Vegas and Phoenix, where she said more than 25% of new-home sales were going to out-of-state investors who had no intention of occupying the homes. "Now those who came late to the party find themselves squeezed by rising interest rates and resulting negative cash flows," she said.

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