Knox Knocked By Over 47 Percent Increase In Foreclosures - I

March 5th, 2008

Imagine losing your house on Valentine’s Day! Well, John Tubbs could have lost his in Knoxville. However, there is some silver lining as his home has not come under the auctioneer’s guillotine at the court house.

Many more residents like Tubbs in Knoxville have been deeply affected by the foreclosure crisis which is showing no signs of slowing down. Though the residents have not remained isolated from the crisis, they have not been overthrown by it either, unlike the situation in many other metro areas.

RealtyTrac, the real estate research firm recorded Knoxville to have 2770 filings in 2007 as compared to 1813 foreclosures in 2006, showing a whopping 47 percent increase. Things could get a lot worse, people say.

Knoxville was ranked 72^nd in the top 100 metro areas of the nation hit by the foreclosure and mortgage crisis. With Nashville ranked 59^th, the Memphis area was ranked 13^th with over 22,000 foreclosure filings recorded in 2007.

The Detroit area takes the top position with the highest foreclosure rate with over 5 percent of its households holed up in some stage of the foreclosure process. A sluggish market and increasing rate of unemployment have added to the areas housing woes. The area is reported to have an increase of 4.8 times more than the nation’s average rate of foreclosures. As we can see, this is far greater than most counties in the country.

RealtyTrac reported that several other cities in California were close behind Detroit, with a total of over 1.3 Million properties up on the foreclosure list.

Director for University of Tennessee’s Center for Business and Economic research, William Fox stated the following reasons for the consistently high rate of foreclosure in the nation:

Lending institutions aggressively marketed their loan products and this practice mad them lend to those borrowers who were not financially as healthy as these loans require the borrowers to be.
Increasing rate of unemployment is only adding more homes on the foreclosure list as people are not able to pay their mortgages in time
A sluggish home market is also making it difficult for people to sell their homes at a reasonable price so that they can get out of the mortgage tangles.

A mix of all these reasons is keeping the foreclosure rate steadily high. It remains to be seen whether the coming months hold any reprieve for this area at all.