Foreclosures – Slowing the Economy Down

Posted on January 9th, 2008 by saman

Foreclosures are no longer a new thing in the slowing down US economy. Not so long ago thriving US economy is one of the hardest hit by its mortgage market. The lenders were always more eager to bring in new people into the debt circle. The lenders were always heard saying that we will think about the repayments of these loans tomorrow; well the tomorrow has come and the bubble mortgage market bubble has finally burst. The economist also say that we had to deal with this mortgage bubble and there is no better scenario then to deal with this economic giant sooner than later. Default Research has observed a 108% increase in the number of foreclosures in the calendar year 2007 compared to last year. Majority of these foreclosures came in the last quarter of 2007 marking it the worst hit quarter in the year.

There is light at the end of this tunnel and economist are hoping that this recession of the economy was much needed, furthermore there are speculations that this year i.e. 2008 will also see a very slow and tentative market but the market will stabilize and we might be able to see a rising US dollar as compared to the Euro and the British Pound. The economists are declaring calendar year 2007 as the year of riving of the economy. The world economy without any doubt has changed and shifted a lot in the last few years and many stock markets around the world seem to be following the Japan’s stock market crash but as promised there are observable signs that this crash in its recession and we will see a brighter 2008.

Detroit is one of the hardest hit areas and the numbers of these foreclosures were a staggering 42,000 while mass of these coming from Wayne, Macomb and Oakland counties. The experts do argue that the Michigan foreclosures will see to it the much needed slow down is achieved in the calendar year 2008 and by the end of this year we will see a small but significant increase in the mortgage market. Although this recession is viewed by experts as a step in the right direction still there is very little improvement visible in the Detroit suburbs due to the increase in the number of ARMs reset and still there would be a number of people that would not be able to come up with the payments.

However there has been seen a significant decrease in the number of foreclosures in the last few months and there is a very chance that they might altogether stop somewhere in the end of 2008. There is still a great uncertainty in the market and although the number of foreclosures in the Detroit market may remain high, it is estimated that these numbers will be no way near the number of foreclosures recorded in 2007 but let us keep our fingers crossed and hope for the best.