A new dynamic appears to be emerging on the housing front. Heretofore, foreclosures were strongly correlated with where the mania had been most acute. California, Florida, and Arizona in particular showed dramatic declines in prices. But now as those markets have corrected to a considerable degree, foreclosure activity is now starting to be a function of increasing unemployment.
From Reuters:
Cities in the U.S. Sun Belt states of California, Florida, Nevada and Arizona dominated the record foreclosure spree in the first half of the year, but distress in other regions emerged as joblessness spread, RealtyTrac said on Thursday…
Mortgages have failed the fastest in the areas with the greatest overbuilding, purchases by speculators and reliance on riskier loan products to improve affordability.
But the source of the mortgage trouble has swung from lax lending standards to unemployment.
Some of the areas with the most severe foreclosure activity have started to show improvement as price cuts and first-time buyer tax credits lure purchasers…
More than 20 percent of areas with above-average foreclosure activity were in Oregon, Idaho, Utah, Arkansas, Illinois and South Carolina in the first half of the year. That shift points to growing unemployment more than to fallout from subprime and adjustable-rate loans, RealtyTrac said in its midyear metropolitan foreclosure market report.
While total foreclosure activity kept rising, “some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, while new markets like Provo, Utah, and Boise, Idaho, have seen large increases,” James J. Saccacio, chief executive officer of RealtyTrac, said in a statement…
“As unemployment rises, we are seeing a change in the financial profile of the people seeking our help,” Suzanne Boas, president of Consumer Credit Counseling Service of Greater Atlanta, said this week.
“We are serving an increasing number of people who work in professional services and skilled trades,” she said. “These people have maintained solid incomes their entire lives, but are now in financial trouble and are reaching out for counseling to help avoid foreclosure.”.
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"We are serving an increasing number of people who work in professional services and skilled trades,"
Here we have a symptom of a shrinking middle class. Is this a sign of descent into a more third-world-like status, perhaps like Brazil? But Brazil is an 'emerging country'; what is the opposite of that, what is the adjective?
Descending? Declining? Waning?
Submerging
Submerging
Old news for us Oregonians who have the second worse unemployment in the nation. NPR reported and the Oregon Economist blogged about this about a month ago.
– LB
Think of it as the giant blob that ate the USA.
The debt clock also has UE and foreclosure numbers tied to it.
US averages 358 UE each hr or 8,592 per day and is accelerating–at current pace 3,058,752 more UE by Xmas.
Foreclosure average 415 per hr or 9,960 per day–you do the math.
the large banksters and fed have sealed our doom–cant wait until they are burned to the ground….
I also teach graduate courses, and more than half of our graduates with MDs and PhDs are now working part time or are simply unable to find work. This while the banks are hounding them down for their student loans. Some of these people graduate with $500,000 in student loans – tell me how will they pay that back?! Some of them also have families and mortgages, and are now defaulting. These are highly educated individuals, who represent the only hope this country has. Yet, they cannot find employment in a country that completely betrayed them.
America, as a business model is unsustainable. The fat cat corporations (insurance companies, banks, drug companies, defense contractors, and even universities) need to wake up and realize that the country is flat on its back with a fading pulse. The criminals mentioned in the previous sentence need to start loosening their death-grip on the jugular of this nation, otherwise the revolution will remove them by force, and their heads will likely roll.
Vinny G.
Vinny G:
Are you kidding me? 500k in student loans? These people are in SERIOUS trouble. Unless they have a sizable trust fund or inheritence, they'll never live a "middle class" lifestyle.
I went to law school a few years ago and had about $130k in debt. That has been a terrible burden, and I have a relatively good paying job with no dependents. I don't see how anyone could make it with 4X the debt I have. You would need to make about $200K at a MINIMUM. Remember, student loan is NOT TAX DEDUCTIBLE once you start making over $60k.
I think the MOST you should borrow to go to school would be 1x yearly income in your field.
Roberto
Having been laid off ("downsized") in March of 2008 from my relatively good job as an insurance company attorney I finally landed a job last week counseling troubled debtors at the princely wage of $10.50/hour. I was truly stunned at the demographic makeup of my newly unemployed clientele; at least 50% have college degrees (often more than one) and have been working continuously for the same employer for ten years or more. Even more amazing – the average "client" has less than a month's living expenses stashed away (a college professor called me yesterday from Oregon who had gone through bankruptcy twice in the past seven years – one Chap. 7 and one Chap. 13 – and was denied a secured credit card which he needed to take his family "on vacation").