About the foreclosure crisis
There has been a lot of recent news coverage about the "foreclosure crisis" that we are all experiencing. According to the news, our economy is suffering terribly due to recent foreclosures--especially in the sub-prime market. I would like to set that record straight. Have I mentioned before that real estate is local? That is still true. When the media reports the story about foreclosures, they never seem to do so on a local level. They only look at areas that are currently suffering, and then they act as if that news applies to everyone.
Recently, Chief Economist Doug Duncan of the National Mortgage Bankers Association made an official statement regarding this ongoing "sub-prime mortgage mess." The news covered the negative aspects, but you really have to dig deep in their articles to find the following good news that was also present:
The foreclosure problem in the U.S. is really only a problem in seven states: Michigan, Ohio, Nevada, California, Florida, Arizona, and Nevada.
The problem in Michigan, Ohio, and Indiana is related to their recent loss of manufacturing jobs. You take jobs away from an area, and the people have to move to where jobs exist.
In each of the other four states, investors have dramatically and artificially forced real estate prices too high, too fast. As a result, builders have also inundated these areas creating an oversupply of available housing. The home prices rose too quickly for many people to keep up.
In these four states, 25% of the foreclosures are on properties held by investors who were speculating, and then just walked away from their investment properties.
35% of homes in America do not even have a mortgage. Either the mortgage has been paid off or the home was paid for with good old fashioned cash.
98% of the mortgages in America are performing just fine. Only 2% are having problems.
Less than 10% of all mortgages in America are in the sub-prime category.
Even the sub-prime loans are mostly performing. Only 25% are not performing.
In the 47 states not listed above, foreclosure rates have actually fallen from 2006 to 2007.
In the DFW area, homes are still selling. Our inventory levels are about half of the national average. This is not the buyer's market you keep reading about in the newspapers or hearing about on the evening news. Our sales numbers are stable. Our property values have continued to rise at a moderate rate.
According to Forbes Magazine, Dallas is the 4th most stable real estate market in the United States with 5.45% price increase over the past year. The Fort Worth market is ranked number 10 in the nation at 3.09% average price increase.
Did I mention that real estate is local?