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Boston Home Foreclosures May Rise Again Due to Price Decline

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By : John Cutts    99 or more times read
Boston home foreclosures may grow again this year after posting a 19-percent year-over-year decline in 2009 due to a sudden surge in joblessness and reversal of home price growth.

After posting an upward home price growth from March to October 2009, Boston suddenly experienced declines in home values in November and in December. According to economist Stan Humphries, the sudden rise in joblessness in the metro area overwhelmed positive factors such as the federal tax incentive and lower mortgage rates.

In December, the preliminary unemployment rate in the Boston metro area shot up to 8.2 percent from 7.7 percent in November. Out of a total civilian workforce of 2.5 million, nearly 206,000 persons were jobless in December, up from 195,000 jobless persons in November.

Humphries also said that the Boston housing market could experience a second downturn after posting price improvements since March. The housing market, he said, could experience a further price decline of about one percent or more.

However, Humphries explained that the price decline could be the price correction needed by the market to finally cut down the pace of Boston home foreclosures.

In 2009, the Boston metro area posted a 19.4 percent drop in foreclosure filings, although the total number of 23,828 was still relatively high and was 126-percent higher than total filings in 2007.

The pace of home foreclosure in Massachusetts in 2009 also posted a slowdown of nearly 19 percent to 36,119 filings, but was still 104-percent higher than total filings in 2007. Massachusetts also ranked 22nd in the country based on foreclosure rate.

In January this year, Massachusetts posted a 21-percent increase in foreclosure filings from the previous month to 4,536 filings, including 817 properties already repossessed by lenders and posted in their books as foreclosure properties for sale. The number marked a 35-percent increase from filings in January 2009 and put Massachusetts 17th in a ranking of states based on foreclosure rate in January 2010.

Statewide, according to the Executive Office of Workforce Development, almost 40,000 jobs were cut down by employers in November and in December last year, pushing the unemployment rate to its highest point in over 15 years. Jobs in technical and scientific firms and in other business service firms were cut down by 7,500 in November and in December.

According to analysts, improvements in the job sector and in home equity levels are the two factors that can significantly put a stop to the expected rise in Boston home foreclosures in the coming months.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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