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Description
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The startling foreclosure numbers revealed by Realty-Trac in January 2007 and the recent fallout in the subprime mortgage market have left real estate professionals and homeowners questioning the vitality of the housing market and the future of the residential mortgage market. Although many theories exist as to why foreclosure filings in the United States increased 42 percent in 2006, these theories have failed to identify the factors unique to various regions that contribute to the demise of specific markets. (1)
If research already conducted on this matter has shown anything, it is that there is no single cause behind the growing problem. The dramatic payment increases in adjustable rate mortgages (ARMs) shoulder the majority of the blame, appearing to be the leading cause in many locations. However, unemployment and a slowing in home value appreciation also have been identified as contributing factors in other areas. Supporting the preceding claim, the Mortgage Bankers Association reported in March 2007 that existing home prices deteriorated more than those of new homes over the last half of 2006. In addition to slowing appreciation, it was reported that the median price of existing homes on the market nationwide had declined in January for a sixth consecutive month.
Several Midwestern states have felt the sting of foreclosure as a result of the substantial loss of manufacturing jobs due to cutbacks at General Motors, Ford, Chrysler, and several automotive parts suppliers. Unemployment rates in Michigan, Ohio, Illinois, and Indiana rose considerably over 2006, with some states reporting unemployment rates over 2 percent higher than the national average. The loss of jobs in the automotive industry contributed to Detroit's reporting the highest foreclosure rate of the... |
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National & regional economies.(Statistical table), June 22, 2007
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