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Foreclosed and Repossessed Home Properties Led to Job Losses

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By : John Cutts    99 or more times read
According to economists, the decline of the middle class economy in Arizona was precipitated by the rise in the supply of foreclosed and repossessed home properties that started in 2006. During the housing boom, most middle class homeowners used the equity of their homes to finance real estate investments, house renovations and other expenses.

When distressed properties in foreclosure auctions in Gilbert and in other foreclosure sales in the region started escalating, those who banked that the boom period will continue lost the most, economists explained. Aside from causing real estate-related investments to tank, the housing industry crash also led to thousands of jobs being lost in the construction and real estate industry. Experts estimate that over 50% of Arizona's construction jobs were lost during the recession.

The crisis also produced thousands of homes being sold at Arizona foreclosure auctions without enough buyers. Middle class homeowners had accumulated loads of debts by this time and with their equity gone to cushion them from the fall, economists added. They stated that the crash of the real estate market that led to job losses eventually led to the fall of the retail trade. Consumers stopped shopping, particularly when almost a tenth of the state's non-farm jobs were already lost.

Economists reported that around 275,000 jobs were lost in the state during the recession. The problem continued until last year, with foreclosed and repossessed home properties reaching almost 50,000 in Phoenix alone. In 2009, foreclosed properties in the metro area totaled 47,992. Prices of existing dwellings also declined to around $119,000 from a high of $267,500 back in September of 2006.

Although the recession officially ended on June 2009, the persistent problems of unemployment and huge supplies of foreclosure auction properties continue to pull the middle class down. Local economists stated that it will take some time before the standard of living of the middle class can be rebuilt. They stated that, although some of them had found new jobs, most of these jobs pay lower than their previous employers.

Arizona economists are predicting that it will take quite some time for the impact of the oversupply of foreclosed and repossessed home properties to wear off. They added that, at least, the middle class has hopefully learned their lesson.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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