Generally speaking, I try to focus on the positive. But every once in a while a problem is so great that we can’t help but pay attention and then, hopefully, learn from our mistakes.
The biggest problem in real estate today is foreclosures. The numbers are high and continue to rise. Kentucky ranks as the 14th worst state in number of foreclosures as a percentage. This is not good news.
I can hear some of you now. “How does this affect me? My income is steady and I’m paying down my mortgage.”
And if that’s true for you, keep it up! You’re doing great. But foreclosures do affect you.
What once was found in only the poorest of communities is now expanding outward. Greedy loan companies are throwing money at people who haven’t proven themselves to be trustworthy. Sure, many of these companies are going out of business, but they’re not the only casualties.
For example, how would you like to be living in Waters Edge? Keep in mind, this is an upscale subdivision in Stone Mountain, just outside Atlanta.
“We saw evidence of insurgency from drug dealers and criminal activity we certainly did not want,” as homes began to empty and thefts in the area increased, she recalls. “It added a sour note about what kind of community we were turning into. We had to get vigilant to let others know we care about our properties and we don’t want these unsavory types of people in our communities.”
Conditions in Waters Edge have improved recently, but 50 homes are for sale in the neighborhood, 21 of which are foreclosures, says Century 21’s Grier.
This USAToday article says, “One foreclosure will shave up to 1.5% off the value of the other homes on the same block.”
That’s not pretty and it’s something, as homeowners, that we don’t have any control over.
I guess the moral of the story is, don’t buy more house than you can truly afford. If a lender offers to give you $100,000, maybe the best reply would be, “Great! I’ll just take $75,000 today and I’ll come back and see you again for the rest later.”
Update @ 4/12/07 5:41: According to this WSJ data, Kentucky is in far better shape than the majority of the country. Between 2005 4Q to 2007 Q1 Louisville is only up .15% in our mortgage delinquency rate. California, Florida and understandably Louisiana are having serious increases.
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