Large Job Losses Drive Foreclosed Houses in 40 Counties

In forty of the 500 U.S. counties with the highest number of households, the pace of foreclose houses has doubled in April this year, compared to their pace in April last year.

Most of these counties are in regions largely protected from the first wave of foreclosures in 2008. In the first months of 2009, due to the persistence of the recession and continued loss of jobs, these counties have started to post big numbers of foreclosed houses. Among these counties are Boise, Idaho and Green Bay, Wisconsin.

In 2008, Idaho was only 19th in charts of state foreclosure rates; in May this year, the state jumped to 9th in the charts, with one house in 437 housing units hit with a foreclosure action.

Similarly, Wisconsin was 28th in state foreclosure charts in 2008; in May this year, the state jumped to 19th in the charts, with one house in every 731 housing units hit with a foreclosure action.

Susan Wachter, real estate scholar at the Wharton School of the University of Pennsylvania, said the ripple effect has widened the scope of the foreclosure problem.

In 2007 and much of 2008, the number of foreclosed houses soared because of subprime loan defaults. Foreclosures in the later part of 2008 and in 2009 were largely caused by the effects of the recession, particularly unemployment.

When analyzed, the foreclosure crisis has completed the vicious cycle of foreclosures causing unemployment that ultimately cause further foreclosures.

Based on data collected by real estate researchers, among the counties with the largest increases in foreclosure filings and foreclosed houses as of April on a month-over-month basis were Rock and Kenosha in Wisconsin, Washington in Minnesota, Horry in South Carolina and Franklin in Pennsylvania.

In Rock County, the rate of increase in foreclosure filings in April compared to the previous month was a staggering 1,397 percent. The closest counties that followed Rock in the list were Kenosha, with 967 percent, and Washington, with 696 percent. Other previously immune counties were York in South Carolina and several counties in Hawaii.

In Boise, Idaho, the high unemployment rate has pushed the monthly average of foreclosed houses to over 700 housing units this year, compared to around 300 in 2008.

Indeed, as HUD Deputy Secretary Ron Sims said, these previously economically strong counties are now suffering the effects of the national economic slowdown, struggling with their own rising number of foreclosed houses just like other foreclosure-hit counties.