Submitted by Anonymous on Sun, 03/11/2007 - 06:00.
The American dream of owning a home is becoming a nightmare for some Michigan families.
After investing their life savings in a home, many families facing layoffs or pay cuts are finding it impossible to pay their mortgages. What's worse, the value of their homes -- often their key investment -- is deteriorating.
Michigan was the only state in the nation to see its home prices decline in value in 2006, according to a recent study by the U.S. Department of Housing and Urban Development. The national average was a 5.87 percent increase, compared with Michigan's -0.44 percent decline.
"You have this incredible overlay of worry in Michigan as people respond to declining jobs and declining incomes," said Dana Johnson, a Detroit-based senior economist for Comerica. "For many families, their house is their largest asset. To see it eroded in value after having seen only modest increases in the last year or two causes real concern."
Michigan was second in the nation in the rate of new foreclosure filings in January 2007 (Nevada was first), according to RealtyTrac, a national real estate and foreclosure tracking site. Michigan saw 11,554 new filings, up 147 percent from a year ago. Nationally foreclosures totaled 130,511 or one for every 866 U.S. households; Michigan had one for every 355 households.
It's not news that Michigan finds itself in a one-state recession, or that the state's economic fortunes have turned sour as a result of the ailing automobile industry and the flight of companies such as Pfizer Inc. and Comerica.
But what is shocking for many families is that the place they call home could become a stone around their financial necks as they try to stay afloat during rough economic times.
"Typically people worked one job to reach a certain income level and now they have to take three jobs to survive," said Karry Reith, manager of the Oakland County Community and Home Improvement program, which provides housing counseling. "It's very difficult times for a lot of people. Their only option may be to leave their house and turn it over to a mortgage company with the hope they can become a homeowner again in the future, when things are better."
Many experts say it's hard to know when things will get better. Michigan's real estate market had ticked along at a steady if not spectacular pace in the last five years while the rest of the nation was experiencing a real estate boom. Today the future is uncertain, and a number of economists don't think Michigan's housing market has hit bottom yet.
The Michigan Association of Realtors reports that the average selling price of a home in December 2006 was $149,753, compared to $153,297 in 2005. The number of residential sales in Michigan dropped from 137,069 in 2005 to 118,407 in 2006.
It's been more 22 years since Michigan saw a three-month quarter with a decline in home prices, according to the U.S. Department of Housing and Urban Development. The last time was the third quarter of 1984 -- the tail end of the 1980s recession -- when home prices declined by -0.28 percent. In 2006, it happened in both the third (-0.51) and the fourth (-0.44) quarters. Many economists expect it to continue in 2007.
"We've had bad patches here before in this state," said Lee Schwartz, executive vice president for government affairs for the Michigan Association of Home Builders, which represents the state's builders. "But I don't think we've had anything like this for a while."
Schwartz said what's especially difficult for the construction industry is that for many years home building remained strong. Despite Michigan's woes, the builders were usually busy. Not so anymore.
"Everybody's down," he said. "There isn't a section of the state that's doing as well as it did in the last four years."
Schwartz said a recent analysis of the Michigan market by his group shows that 1,000,359 families in the state cannot afford to purchase a home priced at $100,000 or more. Another 907,000 families cannot afford a house priced at $175,000 or above.
"That's over 2 million families in the state of Michigan that are out of the market right now," he said. "They can't afford the price of an average new home that's about $175,000."
"Housing prices are just a reflection of what's happening in the rest of the economy," said Marcia Howard, executive director of Federal Funds Information for States, a Washington-based research group. "In terms of general job loss, Michigan has consistently been there at the bottom. ...Michigan is a state that is still so entrenched in the auto industry that it can't overcome the huge liabilities that it's facing."
Source: http://www.mlive.com/news/statewide/index.ssf?/
base/news-8/1173319802250340.xml&coll=1
Michigan Second in the Nation in the Rate of New Foreclosure Filings
The American dream of owning a home is becoming a nightmare for some Michigan families.
After investing their life savings in a home, many families facing layoffs or pay cuts are finding it impossible to pay their mortgages. What's worse, the value of their homes -- often their key investment -- is deteriorating.
Michigan was the only state in the nation to see its home prices decline in value in 2006, according to a recent study by the U.S. Department of Housing and Urban Development. The national average was a 5.87 percent increase, compared with Michigan's -0.44 percent decline.
"You have this incredible overlay of worry in Michigan as people respond to declining jobs and declining incomes," said Dana Johnson, a Detroit-based senior economist for Comerica. "For many families, their house is their largest asset. To see it eroded in value after having seen only modest increases in the last year or two causes real concern."
Michigan was second in the nation in the rate of new foreclosure filings in January 2007 (Nevada was first), according to RealtyTrac, a national real estate and foreclosure tracking site. Michigan saw 11,554 new filings, up 147 percent from a year ago. Nationally foreclosures totaled 130,511 or one for every 866 U.S. households; Michigan had one for every 355 households.
It's not news that Michigan finds itself in a one-state recession, or that the state's economic fortunes have turned sour as a result of the ailing automobile industry and the flight of companies such as Pfizer Inc. and Comerica.
But what is shocking for many families is that the place they call home could become a stone around their financial necks as they try to stay afloat during rough economic times.
"Typically people worked one job to reach a certain income level and now they have to take three jobs to survive," said Karry Reith, manager of the Oakland County Community and Home Improvement program, which provides housing counseling. "It's very difficult times for a lot of people. Their only option may be to leave their house and turn it over to a mortgage company with the hope they can become a homeowner again in the future, when things are better."
Many experts say it's hard to know when things will get better. Michigan's real estate market had ticked along at a steady if not spectacular pace in the last five years while the rest of the nation was experiencing a real estate boom. Today the future is uncertain, and a number of economists don't think Michigan's housing market has hit bottom yet.
The Michigan Association of Realtors reports that the average selling price of a home in December 2006 was $149,753, compared to $153,297 in 2005. The number of residential sales in Michigan dropped from 137,069 in 2005 to 118,407 in 2006.
It's been more 22 years since Michigan saw a three-month quarter with a decline in home prices, according to the U.S. Department of Housing and Urban Development. The last time was the third quarter of 1984 -- the tail end of the 1980s recession -- when home prices declined by -0.28 percent. In 2006, it happened in both the third (-0.51) and the fourth (-0.44) quarters. Many economists expect it to continue in 2007.
"We've had bad patches here before in this state," said Lee Schwartz, executive vice president for government affairs for the Michigan Association of Home Builders, which represents the state's builders. "But I don't think we've had anything like this for a while."
Schwartz said what's especially difficult for the construction industry is that for many years home building remained strong. Despite Michigan's woes, the builders were usually busy. Not so anymore.
"Everybody's down," he said. "There isn't a section of the state that's doing as well as it did in the last four years."
Schwartz said a recent analysis of the Michigan market by his group shows that 1,000,359 families in the state cannot afford to purchase a home priced at $100,000 or more. Another 907,000 families cannot afford a house priced at $175,000 or above.
"That's over 2 million families in the state of Michigan that are out of the market right now," he said. "They can't afford the price of an average new home that's about $175,000."
"Housing prices are just a reflection of what's happening in the rest of the economy," said Marcia Howard, executive director of Federal Funds Information for States, a Washington-based research group. "In terms of general job loss, Michigan has consistently been there at the bottom. ...Michigan is a state that is still so entrenched in the auto industry that it can't overcome the huge liabilities that it's facing."
Source: http://www.mlive.com/news/statewide/index.ssf?/
base/news-8/1173319802250340.xml&coll=1
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