Suburban Areas of small Cities and Towns are the hardest-hit by foreclosure – Why?
Experts attribute the unemployment problem as the basis for the deepening of foreclosure crisis for the last few years. No question – the down-turn of US economy is the root-cause for the housing bubble, to start at first through the ballooning effect of interest rates on mortgages. But the recovery from it has not become possible so far, arising out of the mounting unemployment rates, as the statistics go to show.
American life-style prefers – working in cities and living in suburbs. Most of the residential properties were located in suburban neighborhoods for decades. These residences were long paid off in full and passed on from father to son for generations. Serene Atmosphere, easy commuting facilities with bigger cities, clean and pollution-free environment, big and spacious accommodation facilities compared to pigeon-hole apartments of downtowns etc. were the most attractive features of these properties once.
During the real estate boom years, these suburban properties were star attractions of home buyers and investors. Easy availability of home loans with teaser repayment installments at the initial years, clubbed with negligible payment up-front was the lure to buy these properties, for so many people. By refinancing mortgages, many home owners added more facilities like pools, landscaping and what not, without worrying about the borrowed capital.
The dramatic turn of events by the foreclosure crisis, made it a reality that most of these home owners were unable to meet their financial commitments, and forfeited the equity to foreclosure process. Today, out of the total number of foreclosure homes lying vacant and looking for buyers, a sizeable chunk is from these suburban properties.
Unemployment in suburban areas, where there are no big industries or businesses to provide employment to the family breadwinner; prohibitive commuting cost even if they get employment in the cities; negative equity where the market value of the property would not be sufficient to pay off the mortgage etc. are some of the important reasons, for increased mortgage delinquencies in these locations and people walking away from their homes.
Net result – lending banks hold these deserted properties as repossessed; investors are not interested for there will not be any income by rent or resale; and home buyers are no more ready to settle in these suburban areas of small towns and cities.
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[...] American life-style prefers – working in cities and living in suburbs. Most of the residential properties were located in suburban neighborhoods for decades. These residences were long paid off in full and passed on from father to son for generations. Serene Atmosphere, easy commuting facilities with bigger cities, clean and pollution-free environment, big and spacious accommodation facilities compared to pigeon-hole apartments of downtowns etc. were the most attractive features of these properties once. Read More.. [...]