Foreclosures surge

Relentlessly rising unemployment is triggering more home foreclosures, threatening the Obama administration’s efforts to end the housing crisis and diminishing hopes the economy will rebound with vigour.

WASHINGTON — Relentlessly rising unemployment is triggering more home foreclosures, threatening the Obama administration’s efforts to end the housing crisis and diminishing hopes the economy will rebound with vigour.

In past recessions, the housing industry helped get the economy back on track. Home builders ramped up production, expecting buyers to take advantage of lower prices and jump into the market. Not this time.

These days, homeowners who got fixed-rate prime mortgages because they had good credit can’t make their payments because they’re out of work. That means more foreclosures and falling home values.

The initial surge in foreclosures in 2007 and 2008 was tied to sub-prime mortgages issued during the housing boom to people with shaky credit.

That crisis has ebbed, but it has been replaced by foreclosures tied to the recession.

Unemployment stood at 9.5 per cent in June and is expected to rise past 10 per cent. The last time the economy was mired in a recession with such high unemployment was 1981 and 1982.

But the home foreclosure rate then was less than one-fourth what it is today. Housing wasn’t a drag on the economy, and when the recession ended, the boom was explosive.

Today, the real estate market is still saturated with unsold homes and homes that sell below market value.

“It just doesn’t have the makings of a recovery like we saw in the early 1980s,” says Wells Fargo Securities senior economist Mark Vitner, who predicts mortgage delinquencies and foreclosures won’t return to normal levels for three more years.

Just Posted

Despite warnings, plenty of temptations to thieves left in vehicles

Lock It or Lose It campaign still finding plenty of valuables left in plain sight

Official: 3rd pilot helped on next-to-last Lion Air flight

JAKARTA, Indonesia — The chairman of Indonesia’s transportation safety agency confirmed Thursday… Continue reading

Oil prices, Alberta election call cloud Stampede chuckwagon auction expectations

CALGARY — Chuckwagon drivers and sponsors are hoping for the best as… Continue reading

‘It has to send a message:’ Broncos families await sentencing for truck driver

Kevin Matechuk says he will never, never forgive the semi driver who… Continue reading

MPs continue voting marathon as Tories protest shutdown of Wilson-Raybould motion

OTTAWA — Members of Parliament are continuing their marathon voting session as… Continue reading

Canada’s Alex Harvey caps historic cross-country ski career with home race

Alex Harvey isn’t planning to manage his emotions on the Plains of… Continue reading

World No. 4 golfer Rory McIlroy to play at RBC Canadian Open this summer

HAMILTON — Rory McIlroy is — finally — coming to Canada. The… Continue reading

Daniels: ‘Pain and anger’ around ‘Empire’ in recent weeks

LOS ANGELES — “Empire” co-creator and executive producer Lee Daniels says the… Continue reading

NDP Leader Jagmeet Singh to publish memoir ahead of federal election

TORONTO — NDP Leader Jagmeet Singh is set to release a memoir,… Continue reading

Why Solar: Canada needs to get its collective house in order

Canada needs to get a grip. The country has one of the… Continue reading

Gardening: Take care when making plant purchases

After a cold February, the longer sunny days and warmer weather triggers… Continue reading

Canadian pair fifth after short program at figure skating worlds

SAITAMA, Japan — Canada’s Kirsten Moore-Towers and Michael Marinaro are fifth after… Continue reading

Most Read