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%