For the last few months all we’ve been hearing about are the rising issues in the sub-prime market, and how people’s homes have been foreclosed on left and right. From watching the news you would think that just about everyone has lost their home by now. They make it seem like only the wealthy can afford their mortgages anymore.
Realty Trac, a company that compiles data on home foreclosures, found some interesting things that might calm the waters a bit, and bring us back down to earth. MSNMoney stated some of those statistics, for example:
- Though the national rate of foreclosure increased by a whopping 79% between December 2006 and December 2007, the rate was still only 1.033%. Because about 30% of all homes are owned mortgage-free, this means that for all the noise about a crisis, only seven-tenths of 1% of all homes were in foreclosure.
- In the top 100 housing markets, the average foreclosure rate was somewhat higher — 1.38% — and it was up 78% over the previous year. But if you rank-ordered the list of the top 100 areas, only 34 had foreclosure rates above the group average. Fifty-one areas had rates of 1% or less.
- Foreclosure rates actually fell in 14 of the 100 areas. More important, many of the areas with the highest increases in foreclosure rates were rising off rates that were tiny. The Bethesda, Md., area, to offer the most extreme case, saw foreclosures rise 1,288% — to a rate of 0.682%. In other words, foreclosures there were virtually nonexistent the year before. Today they are still well below the national average. The same can be said for the Albany, N.Y., area (up 638% to 0.25%), the Baltimore area (up 544% to 0.73%) and the Providence, R.I., area (up 354% to 0.41%).
- Another pattern emerges if you cross the foreclosure rates with the Office of Federal Housing Enterprise Oversight (OFHEO) index of home prices. It shows that the top 10 foreclosure areas in America are areas of extreme price change — changes far from the national average of 46.92% over the past five years. (See the table below.)
So in the midst of some foreclosure bad news, we have a bit of good news. Though rates of foreclosure may have gone up, they haven’t gone out of control. The states that have had higher than normal foreclosures have in fact mostly been states where prices tended to have gotten out of control. Maybe a bit of a correction for the market?
While none of this will be good news if you’re dealing with your own crisis of foreclosure, it is a bit comforting to the rest of us who have been hearing the bad news trumpeted from the rooftops, with no hope of relief in the near future. This to me is the light at the end of the tunnel.
LINK:
MSNMoney: Foreclosure ‘Crisis’ is Overblown
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