The first round of foreclosures could be defined as self-imposed. These would be buyers who intentionally or unintentionally bought houses beyond their means. They bought with mortgages that changed quickly on them and they no longer could make payments. Many of the houses in the Twin Cities in the $150 to $250,000 price range on the market fall into this category.
This round for foreclosures is being caused by home owners losing their jobs, being forced to take a pay cut, or the raises they annually received are no longer being given. The budget won't stretch far enough for these people and they are now facing short sales and in the end perhaps foreclosures. These people honestly got caught in the spiral down of our economy.
I met this morning with such a family. He is a contractor who installs windows for builders. Guess what/ Builders are not building so their are no windows to install. She has her own business in business consulting. She is not being called in to help companies run their businesses better. Two self-employed people with 4 kids trying to make costly healthy insurance payments, pay for food, pay utility bills, and make house payments. Their funds can't make all these payments. There are not the fallback jobs of waiting on tables or retail to help make ends meet.
This is what is waiting for our real estate market as we enter 2009.
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