You are hereDetroit – Automakers’ Losses are Homewreckers
Detroit – Automakers’ Losses are Homewreckers
November 8, 2008 --
November 8, 2008 -- BLOOMFIELD, MI – With the Presidential election over and Americans’ focus turning back to the economy, the news isn’t good concerning the domestic auto industry.
Rising unemployment, falling consumer confidence & spending are causing a severe drop in domestic auto sales. The automakers have responded with more plant closures, employee layoffs & buyouts.
The most recent report from the U.S. Department of Labor shows that Michigan has the 2nd highest unemployment rate in the country, with Ohio placing 7th and Illinois 11th. Indiana was slightly above the national average of 6.1%, coming in at 6.2%. Michigan also led the nation with 28,300 jobs lost in the period from September to October of this year.
It’s no surprise that as a result of all the automaker job cuts, the rustbelt states are all experiencing significant home foreclosures as compared with the national average. The 3rd quarter statistics from RealtyTrac show Michigan, Ohio & Illinois ranked 7th, 8th & 9th, with Indiana 11th.
Another interesting correlation is that Michigan and Ohio rank 2nd and 7th of all states in terms of financed homes with negative equity. 38.6% of Michigan homes are worth less than the mortgages on them, while Ohio has 22% of its homes upside down.
These rankings and numbers will only get worse if Chrysler folds or is bought out by GM. Estimates range as high as 90,000 for the number of jobs that would be lost. Michigan would get hit the hardest as that’s where Chrysler has the highest concentration of employees.
Home prices in Michigan, with Detroit already ranked 8th on the Case-Shiller Index, would drop further in response to foreclosures increasing in step with job losses. But, how low could home prices go? Already in the city of Detroit, 90% of homes sold this year had sales prices under $40,000. 50% have sold for less than $20,000.
Despite all this doom & gloom in the Midwest, it’s much worse in the popular sunshine states.
California and Nevada rank 5th and 6th respectively in unemployment. The top four states in foreclosures are Nevada, California, Arizona and Florida. The Case-Shiller Index shows those same four states suffering from the worst drops in home values. Finally, Nevada is number one in the percentage of financed homes being upside down, with Florida, Arizona and California being 3rd, 4th, and 5th.
So much for the, “go west” advice for better prospects.
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Drew Sygit is President of The Lending Edge and holds mortgage industry designations CMPS, CMLO, CALO and has an MBA. He’s spoken for HUD, has written numerous articles and is a mortgage industry advocate for loan originator licensing and consumer education. He can be reached at 248-356-3739. dsygit@TheLendingEdge.com His blog: http://drewsmortgagenews.blogspot.com
Rising unemployment, falling consumer confidence & spending are causing a severe drop in domestic auto sales. The automakers have responded with more plant closures, employee layoffs & buyouts.
The most recent report from the U.S. Department of Labor shows that Michigan has the 2nd highest unemployment rate in the country, with Ohio placing 7th and Illinois 11th. Indiana was slightly above the national average of 6.1%, coming in at 6.2%. Michigan also led the nation with 28,300 jobs lost in the period from September to October of this year.
It’s no surprise that as a result of all the automaker job cuts, the rustbelt states are all experiencing significant home foreclosures as compared with the national average. The 3rd quarter statistics from RealtyTrac show Michigan, Ohio & Illinois ranked 7th, 8th & 9th, with Indiana 11th.
Another interesting correlation is that Michigan and Ohio rank 2nd and 7th of all states in terms of financed homes with negative equity. 38.6% of Michigan homes are worth less than the mortgages on them, while Ohio has 22% of its homes upside down.
These rankings and numbers will only get worse if Chrysler folds or is bought out by GM. Estimates range as high as 90,000 for the number of jobs that would be lost. Michigan would get hit the hardest as that’s where Chrysler has the highest concentration of employees.
Home prices in Michigan, with Detroit already ranked 8th on the Case-Shiller Index, would drop further in response to foreclosures increasing in step with job losses. But, how low could home prices go? Already in the city of Detroit, 90% of homes sold this year had sales prices under $40,000. 50% have sold for less than $20,000.
Despite all this doom & gloom in the Midwest, it’s much worse in the popular sunshine states.
California and Nevada rank 5th and 6th respectively in unemployment. The top four states in foreclosures are Nevada, California, Arizona and Florida. The Case-Shiller Index shows those same four states suffering from the worst drops in home values. Finally, Nevada is number one in the percentage of financed homes being upside down, with Florida, Arizona and California being 3rd, 4th, and 5th.
So much for the, “go west” advice for better prospects.
# # #
Drew Sygit is President of The Lending Edge and holds mortgage industry designations CMPS, CMLO, CALO and has an MBA. He’s spoken for HUD, has written numerous articles and is a mortgage industry advocate for loan originator licensing and consumer education. He can be reached at 248-356-3739. dsygit@TheLendingEdge.com His blog: http://drewsmortgagenews.blogspot.com
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