Remember That Foreclosure Crisis? It's Still Going On
Rampant foreclosure was the big story of 2009, but now that banks are going through their backlog, it's not about to get better.
When the financial crisis hit in mid-2008, foreclosures dominated the news. Major media outlets were flooded with macro stories about staggering numbers of underwater homes and heartbreaking micro stories of people losing their grip on the American Dream. Foreclosure got the royal treatment in Michael Moore's 2009 documentary Capitalism: A Love Story. The rhetoric about the recession had a laser focus on people who'd fallen prey to the housing boom.
The news cycle has moved on, but the situation hasn't gotten much better. According to RealtyTrac, foreclosure activity increased 7 percent in August, which means a total of 228,098 people entered some stage of foreclosure that month. Default notices rose by 33 percent in August. It seems that the properties whose foreclosures were halted because of "robo-signing" and other abuses are now getting a harsh dose of reality. The former real estate boom towns of Nevada, California, and Arizona are still very much in trouble—one in 118 homes in Nevada received a foreclosure last month. That's an improvement from August 2009, when one in 84 Nevada homes were foreclosed upon, but it's still pretty scary.
Now that banks have started to move past their foreclosure backlogs, the housing market will be flooded with new properties and be in even worse shape than before. Experts are split on when the housing market will recover, but it'll likely get worse before it gets better. So the next time an optimistic soul tries to tell you the recession is over, it may be wise to enlighten her.
Photo via (cc) Flickr user BasicGov