DETROIT—According to the Mortgage Bankers Association, nearly 2 million loans were in foreclosure nationwide during the first quarter of 2008. Home foreclosures rose nationally last year from 42 percent to a record 54 percent.
Michigan in particular seems to be hard hit. The Mortgage Bankers Association further reports that, last January alone, 11,554 Michigan homes were foreclosed upon—one for every 366 houses in the entire state.
"A contributing factor is that, in these last few years, many people purchased their homes with a 0 percent down mortgage, or placed no equity in the property," Dennis Nabors, a Keller Williams Realtor/broker with 25 years of experience commented. "Then we faced this huge economic downturn in Michigan, resulting in one or both of the homeowners losing their incomes. Because they had no equity built up on the property, they were unable to go to the bank and take out a home equity loan to tide them over financially—so they end up losing their house."
In January, Wayne County reported one in every 124 households filing for foreclosure. Currently in a number of Detroit neighborhoods, more than half of the homes listed on the market are foreclosed properties. Even in the more affluent neighboring counties of Macomb and Oakland, the foreclosure rate rose 108 percent and 338 percent respectively.
"But, since this is not a hot market, it's definitely a buyers market," added Nabors. "This is an excellent time to upgrade and move into a better neighborhood. I just sold a house to a family who wanted to move into a better school district. They were able to purchase a house that is 900 square feet larger than the one they had been living in. The sellers paid all the closing costs. They ended up with an interest rate of only 5.75 percent. Their old house was sold for $210,000 and they purchased the new one for $212,000, in a much better neighborhood and school district! If anyone out there is renting, I would definitely urge them to buy a house now."
Asked if he saw any end in sight, Nabors said, "Unfortunately no. As a broker, I watch the statistics closely. One indicator that the market is recovering will be when the foreclosures start declining."