Stability In Foreclosure Rate In American States – A Silver Lining In This Recession

August 12th, 2009

In three key states – Florida, Arizona and California – foreclosure rates stabilized in June even if the country is facing severe unemployment problem. People are hopeful that the crucial juncture of real estate market is likely to be come to an end soon. The Associate Press reports this after conducting a survey over 3,100 U.S. counties.

However, the foreclosure and bankruptcy rates become steady from May according to The Associate Press’ Economic Stress Index, but economic growth of the Southeast and industrial Midwest appears hindered due to the severe unemployment problem.

Economic stress has gone up from 10 in May to 10.6 in June due to the unemployment problem. This is the score given on the range of 1 to 100 after taking into consideration each county’s bankruptcy, foreclosure and unemployment rates.

It is only in the second quarter of 2008 that there is economic growth. There, the stress score is much lower at 6.7 because of the economic growth. Usually, a county is considered as a stressed county when it crosses the score of 11. With every passing month, the percentage is shooting up from 34 percent in April to 36 percent in May, and now it has soared up to 41 percent in June 2009. The crisis has worsened compared to February and March.

According to the latest release, the national economic growth has gone down to 1 percent in the last couple of months. It is the most important sign that finally recession rate is descending on the graph.

Foreclosure rates in the key states like Florida, Arizona and California have stabilized at 3.4 percent, 4.1 percent and 3.5 percent respectively.

Jim Diffely who is a regional economist at IHS Global Insight, a consulting firm, opines, “It’s obviously good news to stop the losses”.

However, he admonished that though there is a decrease in the foreclosure rates in some of the states but the progress rate is much slower than expected.

The real estate sector is picking up the growth rate in many places for the past two weeks, according to the figures that have come out. There is increase in the sale of new homes. California is seeing real estate market boom in the past months. However – Nevada, California, Michigan and Tennessee are the states showing highest bankruptcy level and they are the front-runners in stress scores as well.

Some of the state counties are of Tennessee and Florida harbored them from economic slow down because they have high crop and energy values. Counties having manufacturing units are the worst sufferers in this recession.