Economics 101 With Boston Daily
We here at Boston Daily aren’t great financial wizards. Nor are we particularly great at math. (Our strengths are listening and making you laugh.)
But we heard some economic news today that even we know is really bad.
The Warren Group released figures today on the number of foreclosures in Massachusetts. As financial types would say, they are sobering.
According to the Warren Group, there were 7,653 foreclosure deeds in 2007, up 148 percent from the 3,086 in 2006, and up 600 percent from 1,092 in 2005, and during the month of December, deeds rose 136.3 percent to 683 from the 289 filed in December 2006.
There are a lot of big numbers in that sentence, so let’s break out the important ones. In the past year, foreclosures increased by 148 percent. Since 2005, foreclosures have increased 600 percent.
We don’t think we’ve seen anything increase by 600 percent. Sure, we’ve had those little sponges that grow dramatically and occasionally we get 50 percent free bottles of beauty products. But a 600 percent increase in foreclosures?
But don’t worry too much. BostonNOW says the economy will probably be fine locally. And if any publication is a bastion of accuracy, it’s BostonNOW.
January 23rd, 2008 at 4:52 pm
Is the original report available anywhere? I would like to see if it includes any stats on the numbers of mortgages originated during the 5 or so years prior.
There’s a lot of evidence to suggest that from 2001 on or so, normal underwriting standards came off quicker than bras on Bourbon street during Mardi Gras. Some numbers I recall suggested that as many as 50% of new mortgages originated in recent years were interest-only.
My sense is that an awful lot of this spike in foreclosures might be coming from people who got loans in the past 3-4 years, who simply wouldn’t have qualified in more sober times. If true, what you have are a few thousand people who got to pretend they owned their house for a couple years, and now get to go back to renting, which is what they should have been doing all along.