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Five Good Reasons for Investing in Foreclosures in Michigan

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By : John Cutts    99 or more times read
At least five good things have arisen that affirm plans for investing in foreclosures in Michigan. The employment situation has improved, the mortgage default rate has slid down and General Motors is recovering. Also, public officials are on the right track in balancing the budget and containing foreclosure.

In addition, there were more than 19,000 homes that entered foreclosure in April. The 6,252 units that were already taken back by banks for resale is a great number for investors looking for lower-priced foreclosures.

The drop in the Michigan unemployment rate from 14.1 percent in March to 14 percent in April is small, but the fact that the rate fell is a significant development in the state, as Michigan has been posting the highest jobless rate over the past four years.

As 6,000 jobs were added to the labor market, the total number of unemployed workers dropped to 681,000. The biggest gains were attributed to retail employers while the biggest job losses occurred in the hospitality and leisure sectors. In manufacturing, job losses and gains evened out.

Any improvement in the manufacturing sector, particularly in auto production, is significant for Michigan, as the downfall of the three top U.S. automakers in 2008 wiped out the jobs of thousands of workers in the state.

The report that General Motors posted its first quarterly profit in nearly three years is great news not only for residents of Michigan, but also for other states where GM has operations. Its recovery and growth will significantly help a lot of jobless auto workers regain their source of income and help contain foreclosures in Michigan.

In the first quarter, GM posted a net income of $865 million, a stunning reversal from the $6 billion it lost during the same quarter last year. With its good performance, it was able to put money into the retiree health care trust for its workers through United Auto Workers.

Another factor that can encourage foreclosure investors is the improvement in the Michigan loan default rate. Based on reports from the Mortgage Bankers Association, the state default rate dropped to 11.6 percent in the first quarter from 13 percent in the previous quarter.

Although this decline will mean a slowdown in foreclosed home auctions and will mean lower inventories for investors buying foreclosed homes for sale, it indicates that people are recovering from their financial difficulties and participating in the consumer market.

The decline in the Michigan loan default rate is even more significant as the national default rate increased to more than 10 percent, higher than the fourth-quarter rate of 9.5 percent and the 9.1-percent rate posted one year earlier.

Michigan, however, is still ranked fourth among states with the highest mortgage default rates, behind Mississippi and fellow foreclosure-hit states Georgia and Arizona. People learning how to buy repo properties for sale and then resell them can track delinquencies and foreclosures in these states for buying and reselling opportunities.

Lastly, the efforts of state and local officials to contain foreclosures in Michigan are great for investments as these efforts preserve property values and sustain neighborhoods.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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