Minnesota To Be Hit Hard With Foreclosures This Year

May 6th, 2008

A recent study has given a shocking revelation about foreclosure figures in Minnesota. After suffering around 38,000 foreclosures during the last three years, Minnesota is all set to achieve a target of more than 28,000 foreclosures this year alone, said a report by the Greater Minnesota Housing Fund and other non-profit realty groups.

Warren Hanson, president of the Greater Minnesota Housing Fund, is of the opinion that counties surrounding the Twin City Metro has the highest foreclosure rates along with Rochester and Duluth. The report has included data from all the counties in the state. He added “With the rising prices of energy, with the tightening of credit, and with the sub-prime mess, which got a lot of people in trouble - buying more home than they could afford - those are the areas that have turned out to be the hardest hit by foreclosures.”

According to Hanson, the Greater Minnesota Housing Fund report is more accurate than national estimates, and accounts for more foreclosures than other reports. For example, their report shows more than twice the foreclosures suggested by realty tracker RealtyTrac for Minnesota. The report by the Greater Minnesota Housing Fund shows an increase of 39% in the foreclosure rate over last year, and this means that there will be one foreclosed home for every 31 houses in the state from 2005 to the end of the current year.

Hanson also adds that “The situation keeps looking more dire. We’re worried that home prices are in a downward spiral and that this economy is getting worse.”

In 2007, there was only one home for every hundred homes that were in foreclosure in Minnesota, and the following counties Isanti, Mille, Sherburne, Wright, Pine, Kanabec, Le Sueur and Chisago now have the highest rates of foreclosure. Most surround the Twin Cities area.

The recent rise in real estate prices is what fueled the housing developments in these rural areas, which became very popular with speculators, homeowners and real estate developers. Economists estimate that the foreclosure crunch will continue to dampen prices for a few eyars to come, and will come in the way of further price rises.

According to Scott Anderson, prices of homes have automatically fallen by over a quarter in value as soon as it goes in for foreclosure, and easy availability of these houses is causing a further fall in real estate prices. Scott is a senior economist at Will Fargo. He adds “It’s a problem that’s going to hang over the consumer for some time to come.”