Michigan Foreclosures Surged Even Though Employment Improved

by Simon Lindsay on States

Michigan foreclosures surged in May even though the statewide employment situation improved.

Nonetheless, since there is a time lag between a change in jobs and its effects, employment is expected to make a dent on foreclosure activity in the coming months.

The number of homes that got repossessed in May spiked to 8,009 units, up by 28 percent from the April REO total of 6,252. A substantial number of these could have been released by the banks already and are now in listings of homes and condos for sale.

From January to May, a total of 32,865 homes in Michigan have been bought back by lenders, so people thinking of how to buy foreclosures and where to find them can consider Michigan because of the large inventory in the state. As plenty of commercial mortgages are also in distress, there are also a lot of apartment foreclosures and other multifamily properties in Michigan for prospective buyers.

Despite the rise in Michigan foreclosures, state officials and residents are hopeful because the state unemployment rate has significantly improved. The sharp drop in the jobless rate from 14.9 percent in March to 13.7 percent in April and then to 13.6 percent in May is a strong sign that the state is benefitting from the return of capital investments into the state and to the continued commitment of auto manufacturers like General Motors to create jobs in the state.

Since April 2006, Michigan has been topping unemployment rate charts. Finally, in May, the state ranking moved down, as Nevada took the top place when it suffered a net loss of 29,000 jobs and posted a 14-percent unemployment rate.

While Michigan is now addressing the cause of its job losses in the auto industry, and is now reaping the fruits, Nevada is still facing the effects of the decline in tourism and housing demand.

In addition, the rate of month-over-month increase in Michigan foreclosures has dropped from 8.32 percent in April to 5.99 percent in May.