In a very alarming sign for the U.S. economy, foreclosures have continued to dramatically increase in 2010. But there has been a shift. Back in 2007 and 2008, experts tell us that most foreclosures were due to toxic mortgages. People were being suckered into mortgages that they couldn't afford with "teaser rates" or with payments that would dramatically escalate after a few years, and when those mortgages reset, the people who had agreed to them no longer could make the payments. But now RealtyTrac says that unemployment has become the major reason for foreclosures. Millions of Americans have become chronically unemployed during the economic downturn and many of them are losing their homes as a result. But whatever the cause, one thing is certain - foreclosures have continued to skyrocket at a staggering rate.
According to a new report from RealtyTrac, foreclosure filings climbed in 75% of the nation's metro areas during the first half of 2010. At a time when the Obama administration believes that we are "turning the corner", things just seem to get even worse.
Some areas of the country continue to be complete and total disaster areas when it comes to real estate. For example, you have got to feel really sorry for anyone trying to sell a house down in Florida right now. According to RealtyTrac, Florida led the way with nine of the top 20 metro foreclosure rates in the country during the first half of 2010.
But the worst city for foreclosures continues to be Las Vegas.
According to RealtyTrac spokesman Rick Sharga, unemployment has replaced bad loans as the number one cause of foreclosures there....
"Las Vegas has seamlessly shifted from having a high level of foreclosures due to bad loans to defaults caused by a high level of unemployment."
But other cities with high unemployment rates are having huge problems as well.
For those who believe that the economy is supposed to be "improving", it must seem really odd that foreclosure rates in major cities such as Chicago continue to soar.
RealtyTrac says that foreclosure filings in Chicago have increased 23 percent year-over-year to one out of every 48 households.
But it isn't just cities like Las Vegas and Chicago that are nightmares right now.
The truth is that this is a national crisis.
The Mortgage Bankers Association recently announced that more than 10% of all U.S. homeowners with a mortgage had missed at least one mortgage payment during the January to March time period. That was a new all-time record and represented an increase from 9.1 percent a year ago.
Unfortunately, new all-time records are being set all over the place....
*The number of home foreclosures set a record for the second consecutive month in May.
*Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.
*As of March, U.S. banks had an inventory of approximately 1.1 million foreclosed homes, which was a new record and which was up 20 percent from a year ago.
So is there any hope that things are going to get better soon?
Well, according to RealtyTrac’s CEO James Saccacio, that depends on the U.S. economy....
"The fragile stability achieved in many local housing markets hinges on improvements in the underlying economy, specifically job growth. If unemployment remains persistently high and foreclosure prevention efforts only delay the inevitable, then we could continue to see increased foreclosure activity and a corresponding weakness in home prices in many metro areas."
Without good jobs, the American people are not going to be able to pay their mortgages.
So are the millions upon millions of jobs that have been lost coming back soon?
No, unfortunately they are not.
As we discussed at length in a previous article, the big global corporations that dominate our economy are figuring out that they don't really need the rest of us anymore. The American worker is becoming obsolete. After all, why pay an American ten times as much to do the same job? Big corporations can hire two people in China or India to do the same job and still pocket 80% of the difference.
In addition, big corporations don't really need the headache of making employer contributions to Social Security, setting up benefit packages and pension plans or of trying to comply with the thousands upon thousands of ridiculous regulations that the U.S. government continues to spew out.
At this point, the American worker has become extremely unattractive for large corporations, and so jobs will continue to migrate to other areas of the world.
We allowed our politicians to merge us into a "global economy", so now we are all going to have to deal with being part of a "global workforce".
As jobs continue to be offshored and outsourced, more Americans are going to become unemployed and the foreclosure crisis is going to continue to be a nightmare.
It would be nice to put a positive spin on all of this, but there isn't one.