Tuesday, December 04, 2007

Middle class and out of a home in Chicago

The mortgage bubble bursting. I wonder if this story is more or less driven by people living beyond their means. Whatever is going on, I do wonder if this is having an effect on the economy or if this is an effect of the economy. That is the economy is not doing that great right now.

Well we already saw a report here on this blog about the weakening dollar. Now about the problems with housing. From today's Sun-Times...

The home mortgage meltdown isn’t just gutting the poorer parts of town.

It’s beginning to hammer wealthy and middle class Chicago neighborhoods like Lincoln Park, Lincoln Square, Irving Park, Portage Park and Mt. Greenwood — all areas where home mortgage foreclosures have shot up by 100 percent or more from 2006 to 2007.

Data released Monday by the National Training and Information Center shows that in Lincoln Park there were 18 homes in foreclosure during the first six months of 2006 — but that number more than doubled to 37 for the first half of this year.

In terms of sheer numbers, poor neighborhoods still are feeling the worst pain. But percentage increase in mortgage defaults is climbing faster in middle class areas, according to the data.

Poverty stricken West Englewood, for example, had 348 foreclosures, or 111 per square mile — yet that was just a 58 percent increase over the previous year.

But in middle class Portage Park, the heart of the Northwest Side Bungalow Belt, mortgage defaults jumped from 32 homes to 94, a whopping 193.8 percent.

"You had a lot of upper-income people taking advantage of the low rate adjustable rate mortgages, interest only loans and other programs that were available in order to move up, to get an extra two or tree bedrooms," said Jeff Metcalf, president and CEO of Record Information Services, which provided much of the raw data used NTIC analysis.

"And when the job loss, economic slowdown, or declining home values hits, it hits all spectrums rich and poor,” Metcalf said.
BTW, this is a subject of the Capitol Fax blog's question of the day complete with data on Chicago area forclosures.

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