Nov 13 2008
There Goes The Neighborhood: Home Forclosures Up 25%
As the economy wasn’t in enough trouble, we have more bad news out of the housing market:
MIAMI (AP) — The number of homeowners caught in the wave of foreclosures in October grew 25 percent nationally over the same month in 2007, data released Thursday showed.
More than 279,500 U.S. homes received at least one foreclosure-related notice in October, an increase of 5 percent over September, according to RealtyTrac Inc. One in every 452 housing units received a foreclosure filing, such as a default notice, auction sale notice or bank repossession.
More than 84,000 properties were repossessed in October, RealtyTrac said.
Forecloses drop property values for everyone in the neighborhood; compounding our economic problems. One again, our tendency to live beyond our means is catching-up to us:
Years of lending to risky, or “subprime” borrowers that fueled the housing boom has created an unprecedented number of foreclosures due to the inability of many of those borrowers to pay their mortgages, particularly as interest rates reset and as plunging home values nationwide increasingly render properties worth less than the mortgage.
The numbers might also be showing the effects of the economic downturn, Sharga said. If they do not yet, they will soon.
“An economic downturn is traditionally a precursor to foreclosures, even in a normal foreclosure cycle,” Sharga said. “This is not a normal foreclosure cycle by any means.”
All of this bad news at the eve of the holiday shopping season cannot be good for the economy. People will be worried about where they are living, not about what gifts to give. This may be a long ride before it’s over.
