Foreclosure Map Has Subtle Changes
Make no mistake. Just as it was when the sub-prime fiasco hit, California, Nevada, Arizona and Florida still account for more than half of the total foreclosures each month. A resulting sharp drop in property values has dunked enough of those states' homeowners underwater that the foreclosure cycle has continued, even through the summer months of 2009.
At the end of last month, though, RealtyTrac made special note of an increasing foreclosure trend amongst metro areas in states previously not mentioned with any special emphasis; these states included Oregon, Idaho, Utah, Arkansas, Illinois and South Carolina. The inference drawn from the data is that higher unemployment is creating foreclosure spikes in these communities rather than over-exuberant loan practices.
Perhaps it should be noted, however, that areas of high unemployment will not necessarily translate into areas of large scale loan defaults. Another factor to be considered is how inflated local real estate prices are. Some states with rising unemployment still may yet weather the storm due to homeowner ability to remain above water long enough to modify (through state or federal support) or sell.
For those looking to follow the foreclosure domino effect, the best bet is to watch for rising unemployment numbers paired with markets that experienced booming home price growth in the first half of the decade.
Cities like Atlanta, Chicago, and several of Ohio's metro areas are now being covered with focus-not like Las Vegas or Fort Myers-but still as areas of major concern. For those investors in the rust belt where unemployment was already a problem or in the sun belt where consumer confidence outpaced economic realities several years ago, new foreclosure opportunities should abound in 2009 and, most likely, 2010, as well.
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