Real Estate Pro Articles

Georgia Foreclosures Continue to Grow with Some Job Growth Projected

[Valid RSS feed]  Category Rss Feed -
By : Julie Thompson    99 or more times read
Unemployment is one of the primary causes of Georgia foreclosures. The rate of unemployment is currently at 9.8% and has been in a holding pattern over the last year, ranging from a low of 9.3% to a high of 10.7%. Georgia has been below the national unemployment rates in past downturns.

However, the current unemployment rate is higher than the national numbers, and has been over the entire last year. As there is no clear pattern of increase or decrease, unemployment will continue as a serious cause of the foreclosure epidemic.

One reason for the unemployment rate is the number of bank failures in the state. Georgia has the highest number of recent bank failures in the country with 61 failed banks since mid-2008. For many reasons, Georgia had many smaller community banks compared to surrounding states like North Carolina and Florida.

Smaller banks were more vulnerable to local economic conditions, especially real estate projects, consumer housing and land ripe for development. Further, they were too aggressive, adding home loans that were not backed up by a rigorous approval process. Because of these problems, local small business lending has been affected, thus influencing negatively on unemployment.

Forecasts from the University of Georgia indicate that many believe that the number of jobs in Georgia will increase in 2011 for the first time in three years. That is particularly true of the manufacturing sector, where Georgia is competitive with other northern states. With additional employment, some stability in the real estate market is anticipated over the next couple of years.

Continued high levels of unemployment affect the foreclosure market in two ways. Existing homeowners can find that they are unable to keep up their mortgage payments, which could lead to a foreclosure filing. Furthermore, past credit problems, which could have originated from a period of unemployment, will make it much more difficult to obtain a mortgage for the purchase of a home. That decreases the pool of potential homebuyers.

Foreclosure rates for many cities in Northern Georgia show an increase in foreclosures filed during the last month. Cumming foreclosures increased by 8.3% during the mid-April to Mid-May period. Woodstock foreclosures increased by a smaller 2.8%. Stockbridge foreclosures increased 5.5% with an average price for a foreclosed home of $100,900. Canton foreclosures increased 6.3%. Covington foreclosures increased by 8% with an average price for foreclosed homes in that county listed at $54,300. Ellijay foreclosures increased by the much larger percentage of 18.2%.

Prices for foreclosed homes in Georgia average $139,700 statewide, but there are hundreds of homes that are priced under $100,000, some as low as $20,000. The entire southern half of Georgia, which is generally more rural, has fewer foreclosures, both in terms of the number of foreclosures and the percentage of homes that are affected.

There are some additional things that will affect the foreclosure market. Low mortgage interest rates will continue to have a positive impact on the real estate market and the foreclosure problem.

Thirty year fixed rate loans continue to stay below 5%. With rates at this level, it makes it possible for homebuyers to purchase a home. First time homebuyers especially benefit from these rates as they make a home possible for many that had been priced out of the market.

In addition, Georgia has shown some success attracting new businesses to the state. This week there have been three announcements of new or extended installations from the manufacturing sector.

Wireglass Solar announced Georgia’s largest solar collecting array in Valdosta; Porsche announced a new headquarters building to be built in Hapeville; and Georgia Biomass broke ground for a new biomass facility in Ware County. Georgia foreclosures continue to increase. Indications, however, put some positive events in play, with potentially larger employment numbers.
Julie Thompson, has been working on studying the foreclosure market, helping buyers on the finer points of Payon Home Foreclosures.

Related Articles

Print This Article
Add To Favorites




© All rights reserved to Real Estate Pro Articles