Home Foreclosures In 2008 - How Bad Was It Really?

The numbers are shocking. Home foreclosures rose 81 percent over the number of foreclosures in 2007. Foreclosures have become commonplace in many areas. Many streets are lined with "bank owned" signs beckoning any interested party to come in for the well below market value priced home that's for sale. RealtyTrac.com, a leading foreclosure tracking company, estimated that some 860,000 properties were foreclosed on in 2007. This number is only less shocking than what many economists believe will happen in the months to come.

It Could Get Worse

The housing market has been blamed for the sudden drop in the economy and the economic recession the country is facing. Yet, the worst is yet to come, some economists and others believe. It was not until late in the third quarter and into the fourth quarter that individuals lost their jobs. With the number of layoffs happening each month, upwards of 400,000 in some cases, the foreclosure process with these individuals may not even hit the books for another four to six months.

Where It Is Worst

Home foreclosures in 2008 happened around the country, affecting individuals from virtually all walks of life. Yet, four states topped the list in the number of properties foreclosed on. This includes Nevada, Florida, Arizona, and California, some of the country's most affluent neighborhoods. 1.1 million properties in these four states received a foreclosure notice (the first step in the foreclosure process, which can stretch for four to six months.) Of them, about 20 percent of them were found in California. Home prices in California have taken the largest hit as the market was once well over priced. The area is also seeing incredible job loss in the housing and mortgage industries, with all of the agents who sold property here no longer able to find a buyer to sell to.

What About The Numbers

One of the keys to remember about the drop in value that many of these areas are seeing due to the number of foreclosures is that prices are down by 20 percent. What does this mean, really? When you consider the amount that home prices have risen, they have only fallen to 2004 levels, not to levels that date back farther, which can be considered a good sign. The fact is, house prices have only fallen at the speed they appreciated in the previous two years. Prices of real estate in the United States are still strong. In comparison, houses during the Great Depression fell by a much larger amount, to levels that were no less than 15 years off. 15 years of house price appreciation wiped off.

One of the key problems is negative equity, which 40 percent of individuals who purchased a home in 2006 found themselves battling. Some research shows that of the number of foreclosures happening throughout 2008 where specifically on homes that were purchased in the last two years (2005 and 2006.) Purchases of up to 70 percent of the four million homes in foreclosure occurred at this time.

It is important to see the larger picture when it comes to home foreclosures in 2008. A wide look shows that there is no doubt further foreclosures will happen and that housing market is being affected by the economic conditions. The question is, just how much.