Bill Sloat picked up on a new report by Policy Matters Ohio on foreclosures in Ohio (give ’em a link Bill!). I thought I’d pick this up and write a bit on it seeing how I’m smack in the middle of foreclosure hell myself – my neighborhood is experiencing precisely the problem that has been growing and worsening. My home county of Delaware is both the fastest growing as well as the leader in foreclosure rates rate growth.

According to data reported to the Ohio Supreme Court by common pleas court judges across the state, there were 79,072 new foreclosure filings, an increase of more than 15,000 or 23.6 percent from 2005. Filings grew by double-digit rates in 68 of Ohio’s 88 counties in 2006, and statewide, they have nearly quintupled since 1995.

Here is how this happens. People walk into a nicely appointed M/I or Dominion model home (always the largest and most expensive they have) and sit down with a usually well dressed and atractive woman who proceeds to amaze you at how much house you can afford. When we bought our house in this M/I subdivision it was the middle of the road model and we thought maybe a bit more than we wanted to spend. Never fear! M/I Financial is here! Said “sales consultant” then tells us surely we can get approved. Yes, but that’s not the big worry. Affording it would be. Never forget this line: “Yeah, but you’ll be making more by next year right?”. Riiight. Always willing to help you justify overspending, these house babes. There are several things that they don’t tell you, one of which is your taxes are gonna go apeshit in like year 2. Toss all the assumptions out the window at that point and don’t try running down your sales consultant as she’s busy getting people approved for too much house in some other neighborhood.

No big surprise for me to see Delaware Co. lead this list. The reason it has been the fastest growing county in the state – and for some time one of the fastest in the nation – is that they greatly overbuilt it and got a ton of people in at sub-prime.

The foreclosures ran through our neighborhoods like a locust ballet. Always timed about 2-3 years from the build. Each phase of building would get a wave. Our phase is about over it, but there are plenty of houses on the market. Those that sell do so at a loss. Some even pack up and leave it like a broken down car. There is a sign two doors down from me right now that reads “$20,000 below market”. We’d have moved a long time ago if it weren’t for being “house stuck”.

The new home building market is a wild western that needs a sheriff. What I’ve learned (the hard way) is you always must have a buyer’s agent – even for new builds – and you should educate yourself fully and not get the least bit caught up in the propaganda. Oh, and don’t buy that “you’ll be making more next year business”. Real wage growth won’t support the hit you’ll be about to take. The worst part is having neighbor after neighbor drive down the value of your home due to predatory and unfair lending practices, HUD homes, sheriff auctions, and home abandonment. I’ve witnessed the shattered lives myself as people try to keep up only to fall off the mortgage treadmill. It’s a sad sight indeed.

 
  • bill sloat

    Hi Eric —

    I sure would have done a link of possible. I got an e-mail of the full study, so I just pasted it. No link was available for me. Sorry. Next time I’ll try to be more asture — didn’t even think link.

    Bill

  • That “more money next year” line is an extremely brilliant and evil sales ploy.

    What man is going to admit he’s a complete loser? Nope, I probably won’t be making money next year.

    Have to disagree with you on the wild west part, having lots of housing makes affordable housing. We don’t have homes in the middle six figures in Ohio unless they’re mansions. That’s a good thing. But as you found out, the best thing is to buy into a neighborhood after the initial wave.

  • It is indeed evil. You might end up earning more – and most of us try – but the odds are you won’t (in real terms).

    A housing glut does make them more affordable, but severely screws those who had hoped they wouldn’t see DEPRECIATION over the course of 5 years. We have $180k houses selling for $150k here.

    The real issue that you dodge is lending practices that has obviously caused real harm. There shouldn’t ever BE “a wave”.

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