Foreclosures are not just hitting the lower level of the economic spectrum.
New Developments in the Foreclosure Trend: The Rise of Middle-Class Foreclosures
Ouch! Those adjustible rate loans are staring to hurt.
New Developments in the Foreclosure Trend: The Rise of Middle-Class Foreclosures
While foreclosures are typically considered to occur mainly to low income homeowners, new data shows that the foreclosure surge is spreading into middle class areas as well. Exploring the causes for this can help buyers better understand the foreclosure trend.
Miami Beach, FL (PRWEB) June 18, 2007 -- As the housing market continues to move along sluggishly in the wake of falling home values, ForeclosureDataBank.com, a leading foreclosure information provider, has noticed a new trend emerging in the rising rate of foreclosures. Whereas the past few years saw the booming foreclosure rate mainly affecting borrowers with lower income, the analysts at ForeclosureDataBank.com are now predicting a drastic increase in foreclosures on middle class American homes all over the country.
The reason this new trend is so noticeably interesting is two fold. For starters, the statistics themselves don't lie. Recently, the Chicago Defender revealed some telling statistics about this popular city's foreclosure situation. During 2006, the state of Illinois experienced a 55% increase in its rate of foreclosure, with a great deal of homes in the Chicago area accounting for the hike. While foreclosures in poorer neighborhoods have been high during the past few years, it seems that in 2006 some of the biggest jumps came in traditionally middle class areas of the city. These include locations such as the Jefferson Park area, which saw a 90% increase, and the Bridgeport area on the southern side of the city, which experienced an incredible 112% increase in its rate of foreclosure.
Another interesting fact is that three neighborhoods that average close to the median income for Illinois residents ($48,000), Roseland, Gresham and Lawn-Gage Park, all currently have foreclosure rates that are seven times the national average.
Ouch! Those adjustible rate loans are staring to hurt.
4 comments:
Maybe if these homeowners stopped being so greedy, they could sell their houses and cut their losses. But many of them are still looking to make a giant profit...at the expense of their credit!!
there are alot of city workers that live in those areas. I wonder if they are the ones defaulting?
i think the whole city is fucked !
valuations are way ahead of incomes and rents. it's a city of big speculators. why is it so under reported ?
The real estate industry would rather talk about anything else but the mounting foreclosures, rapidly dropping sales, and massive "inventory overhang" of houses and condos that are for sale, but are not listed on the multilist.
I see a building here in RP or Edgewater converted, yet only a handful of the units for sale are listed in the MLS. You can't help but feel that this is a deliberate attempt to mask the huge inventory, and nobody's fooled.
It's a similar situation all over the country. We will be 10 years at least working this situation out, and the damage to individual homeowners will be massive and their losses unrecoverable in their lifetimes.
And don't believe for a minute that even cities that seem cheap compared to ours and seem to have reasonable multiples weren't affected. $144K in Shaker Heights, OH might seem cheap for a gigantic, parquet-floored vintage apt. that would cost $450K here, but relative to incomes in OH, now one of the poorest states in the country, it may be outrageous.
In other words, the only places houses are cheap are places where you can't make a living. Like Memphis, or Detroit.
Never again will we ever see such a rampantly inflated and speculative market, because never again, or so I believe, will we be able to afford to be so delusional and take so much credit risk. It is also not likely that we will ever have so many foriegn investors willing to buy all our bad paper, for very soon foriegners will percieve, if they have not already, that our economy is nothing but a paper-shuffling mountain of fraudulent credit.
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