Foreclosure Crisis Worst Since 1930s Great Depression
As mortgage foreclosure filings in June rose 53 percent from the previous year’s figure, and bank seizures of such homes rose 171 percent, experts say the U.S. is in its worst housing crisis since the Great Depression of the 1930s.
Almost one in every 500 U.S. homes is directly affected by an actual or threatened foreclosure, and banks will hold 1 million properties by the end of the year, representing between one-fourth and one-third of all home sales, Rick Sharga, vice president of marketing for RealtyTrac Inc., tells Bloomberg. Purchases of bank-owned homes at fire-sale prices contribute to the ongoing decline in housing values, which in turn encourages additional foreclosures as more owners see their equity dip below the fair-market value of their homes.
“The foreclosure problem is getting worse and will stay with us well into the next decade,” says Mark Zandi, chief economist for Moody’s Economy.com. “The job market is eroding and homeowners have less equity. Lenders are much less willing to work with you if you’ve got negative equity, and you’re more likely to give up your house if you’re deeply underwater.”
