New Developments in the Foreclosure Trend: The Rise of Middle-Class Foreclosures

While foreclosures are typically considered to occur mainly to low income homeowners, new data shows that the foreclosure surge is spreading into middle class areas as well. Exploring the causes for this can help buyers better understand the foreclosure trend.

Miami Beach, FL (PRWEB) June 18, 2007 -- As the housing market continues to move along sluggishly in the wake of falling home values, ForeclosureDataBank.com, a leading foreclosure information provider, has noticed a new trend emerging in the rising rate of foreclosures. Whereas the past few years saw the booming foreclosure rate mainly affecting borrowers with lower income, the analysts at ForeclosureDataBank.com (http://www.foreclosuredatabank.com) are now predicting a drastic increase in foreclosures on middle class American homes all over the country.

The reason this new trend is so noticeably interesting is two fold. For starters, the statistics themselves don't lie. Recently, the Chicago (http://www.foreclosuredatabank.com/foreclosures-il-chicago.htm) Defender revealed some telling statistics about this popular city's foreclosure situation. During 2006, the state of Illinois experienced a 55% increase in its rate of foreclosure, with a great deal of homes in the Chicago area accounting for the hike. While foreclosures in poorer neighborhoods have been high during the past few years, it seems that in 2006 some of the biggest jumps came in traditionally middle class areas of the city. These include locations such as the Jefferson Park area, which saw a 90% increase, and the Bridgeport area on the southern side of the city, which experienced an incredible 112% increase in its rate of foreclosure.

Another interesting fact is that three neighborhoods that average close to the median income for Illinois residents ($48,000), Roseland, Gresham and Lawn-Gage Park, all currently have foreclosure rates that are seven times the national average.

This trend is hardly isolated to Chicago either. In recent months, ForeclosureDataBank.com's statistics show that Cleveland has experienced a similar widening in the scope of homes involved in foreclosure proceedings, as have Indianapolis and Boston.

Many experts believe that this indicates abusive lending practices may be more widespread than originally thought. Much of the foreclosure boom has been attributed to low-cost, adjustable interest rate loans known as sub-prime mortgage loans. These types of mortgages have been marketed to buyers with low income because they require little or no down payment. However, when the interest rate adjusts after the first year it can skyrocket and raise monthly mortgage payments, with which many homeowners simply cannot keep up.

With more homes going into the national foreclosure inventory, buying foreclosures has become an increasingly popular method of real estate purchase among investors and homebuyers. Many people are very hesitant to pay full price for property right now, even though property values have come down in the past year and a half. With little market confidence, people turn to foreclosures, which can often be bought for well below their market value. Perhaps the trends regarding middle class homes going into foreclosure in Chicago and other urban areas will increase the draw towards these kinds of homes. The market is currently flooded, and these homes have to be bought up before it can stabilize again.

ForeclosureDataBank.com specializes in providing detailed foreclosure listings, information and news to the public. Our dedicated staff can help anyone learn about the real estate market in different areas of the country, provide advice on buying and selling bank foreclosures (http://www.foreclosuredatabank.com) or assist you in finding listings. Visit www.foreclosuredatabank.com to learn more.

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