2006 September 12 Tuesday
Housing Foreclosures Rise In United States

Michigan and other "auto-wreck states" are leading the pack in foreclosures as auto industry lay-offs prevent auto workers from making their monthly mortgage payments.

More than 92,000 homes entered into some stage of foreclosure nationwide this July - up about 5 percent from June and 18 percent higher than in July 2005, according to RealtyTrac, an on-line marketplace for foreclosed properties.

Michigan was one of the hardest hit of all the states, with a 25 percent spike from a year earlier.

Dave Webb, owner of the Hudson & Marshall, reports that the majority of the 250 Michigan properties primed for auction, about 150 in all, lie within 60 miles of Detroit.

Now is a cheap time to move to Michigan.

California housing sales have dropped by almost a third.

Statewide, house sales dropped by 29.9 percent from a year ago, according to the California Association of Realtors.

That translates to an unsold inventory index statewide of 7.5 months, compared to an index of 2.9 a year ago. The California Association of Realtors uses the index to measure the number of months it would take to deplete the supply of homes on the market at the current sales rate.

For Monterey County, July's unsold inventory index was 14 months; Salinas was 15. Last year in July, Monterey County had an unsold inventory index of just under 4, according to Sandy Haney, chief executive officer of the Monterey County Association of Realtors.

Business is booming for a web company that deals in housing foreclosures.

RealtyTrac, an online marketplace for foreclosure properties, said Wednesday it has been listed in the top 500 fastest-growing private U.S. companies by Inc. magazine.

In recent years rising consumer demand was driven by rising housing prices. People were willing to spend on a wide range of goods because they felt more affluent as the prices of their houses and condominiums rose in a bull real estate market. The national savings rate went negative in the United States. But now with the real estate bubble bursting in most parts of the US we run the real risk of a recession in 2007. That recession would likely turn into a world recession.

Share |      By Randall Parker at 2006 September 12 09:42 PM  Economics Housing


Comments
Engineer-Poet said at September 12, 2006 11:26 PM:

Recession means that oil will be cheaper in the short run.

Will Bush be smart enough to start refilling the SPR?

Wolf-Dog said at September 13, 2006 7:43 AM:

It is possible that due to the new oil wells that are becoming operational, and faster extraction rate, if there
is a recession, the price of oil might drop considerably. I am not saying that the total oil reserves increased, we will still run of oil in the world within a few decades, but in the short run, the price of oil might decline if there is a recession in the US, especially since the rest of the world depend on the US imports.

This is very bad for the alternative energy research and development, as well as electric cars, because these new companies are still losing money, and their efforts are in anticipation of viable markets in a few years. IN the past, by causing the price of oil to decline intermittently,, oil cartel successfully devastated many alternative energy research companies.

ziel said at September 13, 2006 5:42 PM:

With our trade deficit at 6% of gdp, our standard of living is due for a big drop. It can happen from a recession, an increase in savings, or inflation from a devalued dollar. But it's unavoidable.

Randall Parker said at September 13, 2006 8:15 PM:

Ziel,

I agree. Nationally we are living 6% per year above our means. Our living standards will either drop or will stagnate for some years while production rises.


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