According to RealtyTrac, Nevada had the most foreclosures in the United States for the beginning of 2008. Nevada earned its place as the top foreclosure state with a rate more than triple the national average.
California was not far behind Nevada in the list of the top foreclosure states with more than a 32% increase in foreclosures since the fourth quarter of 2007 and the rates keep increasing.
Arizona was also on the list of highest foreclosure states with rates up almost 50% but less foreclosures overall than California. California had almost 170,000 foreclosures in the 1st quarter of 2008 versus over 27,000 in Arizona. Other states with a high rate of foreclosures include Florida and Colorado.
Why are these the top foreclosure states?
Many things contributed to the economy in the highest foreclosure states that made them hit the top of this list. One reason is that there was such a big housing bubble in these states that investors went in and caused housing prices to go sky high.
Then the housing bubble burst and people were stuck with homes that had severely depreciated and they found themselves owing more than the value of the home. This caused homeowners to bail out of their homes because they felt the situation was hopeless and they would never catch up on their mortgages. The increase in unemployment and job loss in these states only made the problem worse.
Inner city markets crashed
During the real estate boom, many people were buying houses and condos in the big cities and spending a lot of money on homes that they felt would appreciate in value because of the great job market at the time. Cities like Las Vegas, Detroit, Miami, Atlanta and Los Angeles saw this happen to them.
The construction and real estate industries responded to the boom by building more and more homes and condos. When the housing bubble finally burst, there was a surplus of homes and condos and no one buying them. These top foreclosure states have many areas full of unoccupied homes as a result of this situation.
Will it turn around? – Inventory and foreclosure rates
What it will take to turn around these top foreclosure states is a decrease in the amount of homes on the market, the inventory, and a decrease in the number of foreclosure processes on currently occupied homes.
Until this happens, these states will remain on the list of highest foreclosure states because of excess inventory or an increase in the number of foreclosures. This means that people looking to buy have a great selection of homes to choose from in the top foreclosure states and can get property for less than market value in many cases. These states are not going to turn around quickly because the inventory is so large right now.