Brandon Moore, CEO of RealtyTrac, said as the data was released, “Although national foreclosure activity was pushed lower by decreases in a handful of larger states, 21 states posted annual increases in foreclosure activity, the most states with annual increases since November 2010.” One in 278 housing units in Nevada had a foreclosure filing in February. In California, the largest market, foreclosure filings were on one in 283, which was a numerical total of 48,422. The top 10 states have been essentially the same for three years, including Arizona, Florida, Georgia, Illinois, Michigan, Ohio, South Carolina and Wisconsin. The same states almost all have unemployment rates above the national average. They also are located in the old industrial Midwest cities, or states with good climates that had a huge influx of residents between 2000 and 2010.
There is absolutely no ready solution to the housing problems in these states. The federal government and state attorneys general may force banks to lower principles on some of these hundreds of thousands of homes. Many of the foreclosure filings are completely legitimate, however, because the residents of these houses cannot afford to make monthly payments even at levels adjusted lower. Also, any reset in mortgage balances could take years, as changes work their way through the bureaucracies of the government and financial services industries.
Ultimately, the housing problem is still one of supply and demand, with demand dragged lower by high unemployment. Economists had hoped that this jobs trend would be offset by all-time low mortgage rates. Yet, rates cannot strip away the fear on the part of buyers that a bottom in housing prices is nowhere near. So far, that concern has been confirmed as home prices fall, throughout much of the nation, month after month.
In states like Nevada or Michigan, home prices peaked in 2006. They may never reach those levels again, which leaves many Americans with homes that have absolutely no value.
Douglas A. McIntyre