Foreclosures Spread To Detroit Suburbs
SCOTT SIMON, host:
This is WEEKEND EDITION from NPR News. I'm Scott Simon.
Excuse me, I'm about to sneeze. There are a few glimmers of hope - are a few glimmers of hope in Detroit's home foreclosure crisis. Fewer homes are in foreclosure, more people are buying those that are and the good news for the city is there. But now foreclosures are increasing in Detroit's suburbs. NPR's Cheryl Corley reports.
CHERYL CORLEY: Take a drive through some Detroit neighborhoods and the scene is bleak with rows of abandoned homes with boarded-up windows. Even so, new housing figures show foreclosure filings are down in the city. The crisis is moving to the suburbs where layoffs and adjusting mortgages are hitting the middle class. Century 21 realtor, Elizabeth Bensch, says the city's foreclosure whammy has had a ripple effect.
Ms. ELIZABETH BENSCH (Realtor, Century 21): We didn't see nearly as many foreclosures a couple of years ago in the suburbs. And now the numbers are going up, just like they did in the city. And the values are coming down, just like they did in the city.
(Soundbite of driving)
CORLEY: To prove the point, we pile into a car to take a look at a house in a suburb north of Detroit.
Ms. BENSCH: We are heading to a house in Farmington Hills on East Field Street. It's actually a very nice updated ranch. It's got some really unique features and it was initially on the market for 229.
CORLEY: Bensch is trying to sell it now for $125,000 in a short sale, where the bank accepts less than what's owed.
Ms. BENSCH: Need a buyer right away, and if not, there's a good chance that this house will go back to the bank.
CORLEY: The house is a sunny three-bedroom home with vaulted ceilings and a fireplace.
Ms. BENSCH: Look at all the French doors going out to the wraparound deck.
CORLEY: Bensch walks outside with another realtor, Renee Holman, to show off the deck. Bensch says the owner knew she might have trouble when her mortgage reset, then she lost her job and her mortgage was due to go up again to an even higher monthly payment.
Ms. BENSCH: She left to another state to start over and the leaves are still here from last fall. But just last summer, you know, it was swept, and she had gatherings on this deck and people sitting at the table.
CORLEY: Renee Holman says the home is a good example of the stages that foreclosed houses go through.
Ms. RENEE HOLMAN (Realtor): When it's privately owned, that means the seller's in good condition. They can sell it and still make a profit. Then it makes to a short sale area, where the mortgage company has agreed to take less. And then it moves to foreclosed. That's the transition. And we have literally seen this one from the beginning to now the end, where you're running out of time.
CORLEY: Now the suburbs, just like the city, offer foreclosure counseling and are creating programs to stabilize neighbors. And in the city, home sales are actually on the rise. Karen Cage, the CEO of RealComp, a Michigan-based multiple listing service, says sales of homes in the Detroit metro area jumped by about 30 percent last month. In the city the numbers are even slightly higher. What's alarming is the reason why: crashing home values.
Ms. KAREN CAGE (CEO, RealComp): Overall, when we look at March of this year, the non-foreclosed properties, the median price was 99,950. And the foreclosed was 26,000. There's a tremendous difference between the two. In the city of Detroit proper, the non-foreclosed was 10,000 and the foreclosed was 5,500.
CORLEY: And the median price for all homes in the region dropped by more than 50 percent over the past year.
Ms. CAGE: Out of that still comes the good. Out of that still comes the people who thought they could never afford to buy a home are now finding that they can actually buy a home for less money than they could rent.
CORLEY: The latest figures from RealtyTrac, a company that tracks foreclosures, also hints at good news for the city. It shows foreclosure filings in February dropping a bit in urban areas like Detroit's Wayne County. Rick Sharga, a vice president with RealtyTrac, says there are a couple of reasons why.
Mr. RICK SHARGA (Vice President, RealtyTrac): One, that the levels of foreclosure activity you saw in places like Cleveland and Detroit, particularly, may have just been unsustainable, and we're seeing them settle down a little bit.
CORLEY: But Sharga says another reason may be that banks and lenders may have stepped back on filing Detroit foreclosures as they try to manage the huge volume of properties they've already taken back.
Cheryl Corley, NPR News.