We see and read about the percentage of increase in the national foreclosures (79% from 12/06 to 12/07). If we look a little closer at the data however, we see that the numbers aren't really what they seem.

Of the 10 highest foreclosure areas in the US, in nine of those areas houses have appreciated over the last five years. In half of the10 highest foreclosure areas in the US, houses have appreciated an average of 104% over that period of time!

Detroit is the only area of the top ten, where home appreciation in the last five years has been negative. This area has other economic problems associated with the decline of auto manufacturing that has affected housing.

The data shows the problem is more regional than national. The national average is about 99 healthy mortgages to 1 that is foreclosed on.

If you purchased a house in California, Florida, and Nevada, five years ago or longer, you got a 20% appreciation per year on your investment. Did you get that on your 401k? Even if the value of your house has dropped by 15% recently, you are still way ahead of the game. Your net worth has climbed considerably during that time, without any investment strategy on your part.

So the problem comes down to those who bought a house more recently. If you bought with a small amount of money down, or you had an interest only loan, or an ARM mortgage, you probably are upside down on your house mortgage. Unfortunately you bought at the top of the bubble.

Data also tells us that more people are paying their credit card bills before making their mortgage payment. By going into foreclosure, their FICO score will be affected. Your FICO score will also affect you auto insurance, rent or anything with an interest payment attached to it. These folks are taking the short sighted course.

Another subtle issue is that foreclosures will affect the value of homes in the area. Appraisers compare other homes in the area when someone wants to refinance or sell their house. If there are foreclosed houses in the neighborhood the appraisal will be lower due to the foreclosures.

Did we bail out the stock market when it dipped more than 30% in 2002? I am sure more than 1% were affected by that decline. So why do we need the government to bailout this "crises"?

More info on your stop foreclosure information search:

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