If you are looking at the worst zip codes in the country for foreclosures, they all tend to share some of the same characteristics. The homes values are slightly below the state averages in terms of value while the income level of the residents are significantly below the state average income levels.
We talk about the issues facing the real estate industry and foreclosure, but more and more the analysis points to one fact. Low interest rates and even lower levels of qualifying borrowers have created the mess that we are working through.
The combination of government trying to create an ownership society, the post 9/11 drop in interest rates, and the introduction of Wall Street as the driver of mortgage lending instead of Main Street created a lethal cocktail.
It allowed housing prices in low income sections of cities to be driven up at the same time subprime loans were issued to the people who lived there to buy the properties. Now these same homes are crushing the owners as they are in no position economically to pay for the homes. For example, the 2nd highest zip code 30310 is in South Atlanta. The average income is 48% less than the state average and even lower compared to the average for the city of Atlanta. Yet, the housing prices are 71 percent of the state average.
The income to property value ratio is so far off that the property owner will have a very hard time finding renters who can afford to live there. Of course this a great generalization but it does explain why foreclosures are hitting these neighborhoods so harshly. The people living there really never had a chance to afford the loans that were sold.
Top 10 Worst Hit Zip Codes By Foreclosure – Second Quarter, 2007
(stats are in order: zip code, city, foreclosures in 3 months, median income, and percentage of state income)
- 44105 Cleveland, OH 783 $22,889 58%
- 30310 Atlanta. GA 709 $22,715 48%
- 80219 Denver, CO 705 $27,959 52%
- 48228 Detroit, MI 679 $26,953 57%
- 95823 Sacramento, CA 634 $30,481 61%
- 48205 Detroit, MI 634 $26,115 61%
- 48224 Detroit, MI 583 $32,503 76%
- 89031 N. Las Vegas, NV 575 $42,952 80%
- 80239 Denver, CO 553 $31,633 68%
- 48219 Detroit, MI 549 $31,676 74%
I have reviewed the list above and it isn't surprising. Especially Atlanta. I have lived in Atlanta years and I have seen the flux of contractors desend on 30310 (West END area) About 8 years ago you couldn't drive through the West End area of Atlanta without running into a home flipper. There are several reasons why the forclouser rate is high: Purchasing homes for more then what they are worth and appraisers giving erroneous quotes for the price of the home. Example: Homes worth 120,000.00 , appraised for 285,000.00. Bank believes appraiser and approve the loan. First payment becomes due and the person who applied for the loan is no where to be found.
Another reason: Contractors buy a house and only fix up the front of the house and not the inside. Take pictures send it to the insurance company and that are insured. Earlier this year a mortgage business was closed because they were doing fradulent loans in this area. Everyone was arrested from the Realestate agent to the loan officer. The lady said the home was worth more then what it was and the person who was doing the loan was suppose to get 35,000.00 at closing. The lawyer called the FBI and lets just say there was no closing.
Last but not least banks and mortgage companies that are approached about a loan in the West end area requires 2 apprasils before the loan can be approved. One from the mortgage company and the buyer.
This area has a RED flag alover it. Buyers beware.
It's really not a surprising list at all, Detroit's houses are selling for less than used cars. California has been feeling the pain for a while now, too, along with the Las Vegas area. The rest of the info isn't surprising, either, although very interesting.
With exceptions given to Ohio & Michigan where job losses in the manufacturing sector has hit those area the hardest, the cities noted experienced the biggest booms in the history of the US housing markets in 2003, 2004 & 2005.
With every boom comes a bust just as big as the boom was! Sadly, with every boom, comes deviants who want to create short cuts to making money, this hiwever exists in the human condition; greed. It is not exclusive to the real estate or mortgage industries.
I have seen a used car salesman in my day that had a penchant for lying.
[...] of my posts, Top Ten Worst Hit Zip Codes by Foreclosure, had about 5 million headline impressions on USA Today with 11,000 reads of the article and nearly [...]
Well, I pleased that not even 1 Miami area zip code in that list. However, considering how many foreclosures we have, this list is even more frightening.
like to see the stats Bllingham WA
like to see the stats Bllingham WA. for Fore clousers in Recriation Properties
[...] pick-up by Fox News, Reuters, Internet Broadcast Systems, Biospace and Cox-owned newspapers in OhioThe Real Estate Bloggers — more than 11,000 readers checked out the worst foreclosures by zip code postMichael Vick [...]
The subprime mess IMO is the biggest problem right now. I wrote an article about it here.
I had first hand experience when a guy that purchased one of my houses was foreclosed on in less than a year.
[...] they didn’t. And, in fact, income/housing price disparity is one of the great predictors of high foreclosure rates: If you are looking at the worst zip codes in the country for foreclosures, they all tend to share [...]
Right now, foreclosures or no, it's a GREAT time to b investing in real estate!
Nick Cifonie
Host: REI-TV
just curouis about the stats on ft.smith-ar.
This should be really no surprise to anyone. Should have seen it coming. IMHO – I would imagine the best fix would be to fire every politician in Washington and start fresh. But like all good things it would only last for awhile until they became corrupt as well. You can bet your last dollar that is where it all started….
I am not surprised that Detroit is in the top 10, but I am surprised that multiple zip codes dominate the top 10. I would have to guess that Florida is really up high on that list as of 11/2008.
Interesting information and speculation concerning the median incomes for the zip code and their relationship.
However.. for Las Vegas Real Estate and the zip code 89031, some of the hardest hit zip codes for Las Vegas are in areas of new construction where the new home builders pushed prices to the max… all while selling the notion that prices go up with each phase.
The only reason Ohio made the list was because of the cancer sore city of Cleveland.