Detroit foreclosure homes are still surging and are still causing a lot of concern despite improvements in the sales and prices of starter homes and in the increase of building permits in February.
Foreclosure activity in February surged as the number of underwater residential mortgages in metro Detroit soared to 131,262 in December.
Despite stepped-up foreclosure activity, sales of starter homes in the price range of $200,000 increased, pushing up slightly the median price from $63,734 in the counties of Wayne, Macomb and Oakland to $67,000. Detroit is the administrative seat of Wayne County. These sales and price increases gave some hope to local realtors, in addition to the rise in building permits.
New permits for single-family houses rose in number by 32 percent from 347 units to 458 units in the first half of 2009, based on data from the Building Industry Association of Southeastern Michigan. Most of the permits were issued for houses priced below $200,000.
Despite these positive signs, local real estate professionals are still concerned about the expected increase in number of Detroit foreclosure homes arising from unemployment and underwater mortgages.
Likewise, statewide foreclosure activity surged in February by 14 percent despite the declining foreclosure trend in other states, such as the drop in Illinois foreclosures and Nevada foreclosures.
In Michigan, foreclosure postings rose to more than 20,000 postings, including nearly 7,600 real estate owned units already posted for investors and owner-occupant buyers looking to buy foreclosures for sale. Among the ten most foreclosure-clobbered U.S. states, only Michigan, Florida, Georgia and Maryland posted month-over-month increases in foreclosure rates as the other six posted declines.
Michigan homeowners are suffering from low property values, with 33 percent of all mortgaged housing units wallowing in negative equity. In addition, many borrowers made low down payments when they bought their homes and were never able to increase whatever initial equity they had because of financial difficulties.
Michigan once thrived when the U.S. auto industry ruled the world, but as global competition became fierce and internal problems common to big enterprises multiplied, the state suffered from massive job losses when the big American auto firms became bankrupt.
The hardest hit Michigan city is obviously Detroit, forcing a large number of residents to leave their mortgages and look for jobs in other cities.
Today, Mayor Dave Bing is campaigning for his city downsizing plan, moving families from neighborhoods blighted by Detroit foreclosure homes into neighborhoods that would make up the new Detroit.
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