Record Foreclosures and Plummeting Home Prices—Does the National Crisis Translate Locally?
By Foreclosure Fighter staff writer
Here at Foreclosure Fighter, we have followed the housing market crisis closely through articles on the subprime mortgage lending industry and the dramatic increases in foreclosures across the United States over the past year in particular.
However, lest we make the mistake of misrepresenting the way that housing markets operate during this nationwide crisis, we wish to present the silver lining in the crisis.
Of course, most of the numbers reported on Foreclosure Fighter and news outlets across the country represent national rates of foreclosure, as well as aggregate drops in the median home prices across the country.
Yet, as we have written before, the numbers can be misleading sometimes. For example, we previously reported that median home prices across the country for the second quarter had dropped 1.2 percent from last year, with the largest regional drop seen in the Northeast, at 4.8 percent.
However, the numbers in this case were dragged down by three major metro areas that saw catastrophic drops: Detroit, Michigan metro area was hit for a 10.5% drop, while Miami, Florida and Indianapolis, Indiana both saw around 5% decreases.
Otherwise, some major housing markets saw distinct increases in median home prices. Home prices rose 14.6 percent in Seattle, Washington; 14.3 percent in El Paso, Texas; and 12.3 percent in Portland, Oregon. In the Gulf Coast, thanks to rebuilding efforts after Hurricane Katrina, prices rose 15.5 percent in Gulfport-Biloxi, Mississippi; 14.1 percent in Baton Rouge, Louisiana; and 7.6 percent in New Orleans, Louisiana.
It's the same story for foreclosures. Quarter 2 statistics showed that thirty-four states actually had decreases in the foreclosure rates, and another twelve states demonstrated merely modest increases. Only four states were responsible for the record increases nationally: California, Florida, Nevada and Arizona.
Even more recently, many local newspapers have been reporting positive trends in the housing market and economy that run counter to the national averages.
- The Minneapolis-St. Paul Business Journal reports that the Twin Cities economy has remained stable in spite of the housing market crisis. A MetroStudy report found that Twin Cities businesses have added 93,600 new jobs since 2003, and that the area has sustained an unemployment rate below 5 percent for the last four years.
- A guest column by real estate appraiser Tawfik Ahdab in The Register-Guard (Eugene, Oregon), warns locals against reading too much into reported numbers for Lane County, Orego regarding foreclosures and "plummeting" home prices. After breaking down the economics of submarkets for the reader, Ahdab writes, "The news media do a disservice by treating monthly changes in the market like a horse race to be described in hyperbolic language. In reality, there is no bad news to report about the Greater Lane County market — except that overpriced listings will sit on the market longer and will expire in greater numbers."
- KPVI television reports that the housing market in Eastern Idaho is still performing well, with an increase in homes sold through October over the entire year of 2006, as well as an increase in the median home price of $12,000 and nearly $30 million more in annual sales through three quarters compared to all of last year.
- The Buffalo Niagara region in upstate New York experienced a slight decrease in total home sales for the month of September (1,007 down from 1,039 last year), but overall saw a 6 percent rise in the median home price. Right across Lake Ontario, Toronto, Canada is forecasting record highs of resales and new home construction, especially in the suburbs of Hamilton, Brantford, Sudbury and London, with median home prices rising 6.2 percent.
All of these observations are an important reminder why it's good to consider all the available information before jumping to a conclusion about how rising foreclosure rates and dropping median home prices will affect your area directly. Take the time to review local data on foreclosures and home prices, as well as how your area might be affected by new steps taken by the federal government, as well as measures enacted by local governments, to address the subprime mortgage crisis.