Michigan Home Prices Fall as Foreclosures Rise
Average home prices in the Metro Detroit counties of Macomb and Oakland have fallen by 12 to 22 percent due to the continued unloading of foreclosed properties into the housing market and the soaring Michigan foreclosure rate. Median home prices in Macomb dropped by an average of 14 percent and Hazel Park and Lathrup Village posted the biggest declines with 22 percent.
Oakland County, recognized as the most economically advanced part of the region, suffered large rates of decline in home prices, with Birmingham and Bloomfield Hills both posting nearly 15 percent and the area of West Bloomfield posting 12.15 percent.
Among Detroit areas, the most adverse effect of bargain home prices happened in Hazel Park, which was home to 18,000 people. With two units in every 25 homes put into foreclosure, home prices decreased to a point that bankers approved subprime mortgages to be able to sell the repo homes.
With subprime rates of more than 40 percent applied on the home loans, subprime borrowers eventually defaulted, continuing the cycle of cheap home prices and foreclosure.
Ed Klobucher, city manager of Hazel Park, said that the high number of affordable homes in his community attracted predatory lending companies to target his area.
According to a survey by the National Association of Realtors (NAR) in the first quarter of this year, nationwide, single-family home prices dropped 7.7 percent in the first quarter, the largest annual decline since 1982 when NAR started compiling home prices. During the third quarter, the national average single-family home price dropped by nine percent to $200,500 from the same quarter in 2007.
Although Michigan foreclosures slowed down a bit in September by 12 percent to 265,968 in August, home prices continued to fall due to the rising number of unsold houses. In the quarter ended September, statewide foreclosure filings increased by only two percent compared to the same quarter in 2007. Metro Detroit’s foreclosure filings decreased by 24 percent compared to the same quarter in 2007.
