U.S. mayors in Detroit to target foreclosures

Detroit Foreclosure & Real Estate News

Michigan Foreclosure News Abstract:  Mayors from across the U.S. will convene at a conference in Detroit later this week, to discuss the future impact of rising foreclosures in Michigan and across the nation. Metro Detroit foreclosure rates are enough of an alarm, where a sputtering economy was enough to cause financial and real estate turmoil.
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Mike Wilkinson / The Detroit News

Falling home values, spurred by a dreadful economy and a rising spate of foreclosures, are expected to put a clamp on the nation's economy well into next year, according to a study that mayors from across the country will discuss at a special meeting held in Detroit today.

With new foreclosures expected to climb another 1.4 million next year, the economy's growth will slow to 1.9 percent -- nearly a third lower than would have been the case without the housing market's downward spiral, according to the report compiled by Global Insight.

Members of the U.S. Conference of Mayors are to hold a closed-door meeting at the MGM Grand Hotel today to talk about the report and address the foreclosure problem that counts Metro Detroit and Michigan as among its unfortunate leaders.

The effects are profound: In addition to lower employment in the construction industry, the declines will put a crimp on spending as fewer people tap into their home equity. Consumer spending is expected to fall $72 billion and, Global Insight expects auto sales will be the lowest in 2008 since 1998.

Unlike Florida and California, where most of the trouble is related to the implosion of an overheated housing market, Metro Detroit is buffeted by a struggling economy and a falling housing market, said Nigel Gault, an economist for Global Insight. Its prospects for recovery will be made more difficult by the drop in housing values and the high rate of foreclosures.

"You never had a housing boom," he said. "You were in a bad position to start with and you're going to be in a worse position going forward."

The report is yet another in a long line of siren calls from consultants, economists and politicians about the impact of the rapid decline in housing values. While estimates vary, most agree that the bursting of the real estate bubble -- inflated by easy credit and hopes of ever-rising values -- will linger for years and could yet get worse as more adjustable-rate mortgages reset.

Detroit Mayor Kwame Kilpatrick, who will host the meeting, has announced plans to try to stanch the flow of foreclosures. He wants to assist residents and others to protect neighborhoods from foreclosure while helping find buyers for foreclosed properties.

The mayors' meeting takes place on the same day that The News kicks off a series examining the causes and impact of Metro Detroit's foreclosure crisis.

 

For more information on Michigan foreclosures, and related stories, please visit the Michigan Foreclosure homepage.

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