Foreclosure Sales Figures Show a Ray of Light in a Dismal Housing Market
President Obama will head to Congress Thursday night to talk about jobs and the economy -- the issues dominating the minds of American voters. But before the economy actually turns the corner, the corner will have to at least be visible. We may finally be catching a glimpse of it in Patchwork Nation where the housing market is concerned.
In the communities most decimated by the housing crunch, there are signs that all those homes in foreclosure are starting to sell more.
With data from the firm RealtyTrac, Patchwork Nation analyzed sales of foreclosed homes in the second quarter in our 12 county types and found that two types in particular saw a sharp increase in the 9 to 10 percent range - the Boom Towns that experienced big population growth last decade and the heavily Latino Immigration Nation.
Both those county types rode the housing boom that powered the U.S. economy through the good times and both saw high numbers of foreclosures, as we have noted in more in-depth reporting. As the 2012 campaign intensifies, they are full of frustrated, unhappy voters.
And though it is too early to call the quarterly numbers a "turnaround," they show that the places with large surpluses of foreclosures are starting to see their inventories lighten a bit. That's critical if prices are going to rise and home construction is going to pick up again.
Any true housing recovery is still a long way off, but these numbers at least offer some hope of an improving picture.
Why the Boom Towns Matter
One huge caveat on these quarterly numbers is they are not uniformly better. In fact, the number of foreclosure sales decreased or were flat in five of our 12 county types - the aging Emptying Nests, Mormon Outposts, Military Bastions, Minority Central, which holds large numbers of African Americans, the and small-town Service Workers Centers.
Some of those places are struggling economically, particularly the Emptying Nests, Minority Central and Service Worker Center counties. But the economic pain in those communities is not being driven primarily by foreclosures. They have larger, deeper issues with unemployment, many of them related to manufacturing.
The uptick of foreclosure sales in the Boom Town counties, however, is especially significant and hopeful.
Those 385 counties scattered around the country were hit extremely hard when the housing market collapsed because it struck at what had become the center of their economy. As those places grew in the first half of the last decade everyone made money in home construction (directly and indirectly). When the good times ended, their economies became shells of what they had been.
In May, we visited Eagle, Colo., a Boom Town that saw its population double last decade, and found a community resigned to harder times ahead. A raft of foreclosures there has meant crashing home values and people "underwater" in their mortgages.
If foreclosure sales keep increasing in the Boom Towns over the next few quarters it may mean those counties can get back a little of their long-lost economic momentum. That might help lessen some of the political tensions in those counties where voters were quite angry in 2010 and where they showed it at the ballot box where they turned hard against incumbent Democrats. The Republican vote grew by 9 percentage points in these places.
The foreclosure sales increase could also play a role in the 203 Immigration Nation counties, primarily based in the Southwest where construction was a large part of the economy. Construction provided a good-paying employment base for much of the immigrant population in those places.
Foreclosure sales also surged in the collegiate Campus and Career counties and in rural, agricultural Tractor Country. But the economies in those places function differently and there were far fewer foreclosures in those counties to begin with, so the changes there won't be felt as strongly.
'Healthy' Still a Long Way Off
After years of bad news for housing, these sales numbers are a good sign, but they are by no means the turning point everyone seems to be waiting on for the U.S. economy.
Foreclosure Sales in Second Quarter by Community Type
|Community Type||Foreclosure Sales||Change Q2 vs. Q1|
|College and Careers||6,618||9.2%|
Source: Patchwork Nation analysis of RealtyTrac data
When President Obama gives his economic speech Thursday, there will almost certainly be elements of it aimed at revitalizing the housing and construction economies -- and rightfully so. There is a lot of work to be done to get the housing market back to something that looks even relatively healthy. Remember even with these sales there are close to 2 million foreclosures on the books in the United States and thousands of new homes added to the rolls every month.
And the anger in places like the Boom Towns isn't going to just go away. It runs deep. As we have noted elsewhere, the Boom Towns have been reliable bastions of Tea Party support.
But when you are down for a long time, even a sliver of something that looks up can feel pretty positive. That's what these foreclosure sales numbers are -- a start, but it's going to be a while before long-term improvement is in the works.