Foreclosures Worsen In 75% Of Major Metro Areas In First Half

RealtyTrac, a leading real estate research firm, reports that foreclosures in 75% of metro areas rose in the first half, another sign that the housing market never recovered from the tough it hit 18 months ago. RealtyTrac’s  Midyear 2010 Metropolitan Foreclosure Market Report shows 154 of the 206 U.S. metropolitan areas with a population of 200,000 or more posted year-over-year increases in foreclosure activity even while foreclosure activity decreased in nine of the 10 regions with the highest foreclosure rates.

In other words, the cities with the most distressed housing problems had slight year-over-year improvement, but the market is still depressed.The hardest hit cities have not changed over the course of the year. Las Vegas had the highest rate as 6.6% of the homes in the area received foreclosure notices. A total of 53,525 Las Vegas properties received a foreclosure filing during the first half of the year,  down 9% from the same period of 2009. Cape Coral-Fort Myers, Fla, Modesto, Calif., Merced, and Riverside-San Bernardino-Ontario all remained at the top of the list.

One trend in the data is encouraging. It appears the home purchases in the cities where foreclosures are the worst may have started to recover. That could be why there is some improvement in the foreclosure numbers. Alternatively, those homes occupied by financially troubled owners may have begun to hit a limit, another sign that the problem has bottomed, but not necessarily an sign that the trouble has gotten better.

The cities with high foreclosure rates tend to match those with the highest unemployment. New data from the Bureau of Labor Statistics  shows that the unemployment rate in Merced is 18.1% The figure is 14.4% in Riverside. Cape Coral’s unemployment is 13%. In Las Vegas, it is 14.4%.

Economists have come up with a number of complex models about the levels of foreclosures at the national, state, and local level. The RealtyTrac and BLS data shows that complex models are unnecessary. The correlation between unemployment and real estate problems is nearly irrefutable. This extends to the state level with Michigan, California, Florida, and Nevada at the top of the unemployment and distressed real estate lists. Drops in the number of manufacturing and construction jobs have been profound in these areas. Unfortunately,  those jobs are not coming back.

Douglas A. McIntyre