When it comes to the U.S. residential real estate market, the latest statistics and forecasts don’t bode well at all for the industry. Recently released stats on foreclosure rates reveal that 2009 was the worst year on record. And unfortunately, 2010 is looking like it’ll shatter the record yet again.
According to RealtyTrac, a firm that monitors real estate and foreclosure data, more than 2.8 million properties in America received a foreclosure notice during the past year. That’s 21% more than in 2008 and a whopping 120% higher than what was reported in 2007.
Moreover, one in every 45 households received at least one filing last year – nearly four times higher than 2006. These ugly numbers were racked up in spite of robust foreclosure prevention programs, without which the figures doubtless would have been significantly higher.
Unfortunately, the scenario doesn’t appear any better for 2010. Unless and until lenders are able to get principal balance reductions, high default rates are going to continue. In fact, RealtyTrac projects that a new record of 3 million or more properties will get a filing this year.
Where are we seeing the biggest problems? Well … in Michigan, to nobody’s surprise. But also in Nevada, Arizona and Florida. Until recently, those were states blessed with dramatic – even outsized – population and job growth, along with commensurately growing political power.
But as outlined in a recent article by Michael Barone, in an interesting twist of fate, these states are now experiencing net out-migration, while erstwhile laggard states in the Northeast and Midwest are now showing net in-migration.
It’ll likely take years to sort out the scrambled residential real estate market we have today – a situation sparked by a housing crisis for which many in government and the private sector are responsible … but which has also caught far too many innocent people in its clutches. Hopefully, the lessons learned will not be soon forgotten.