National Housing Market Outlook

Rippling of Unemployment into Foreclosures and Credit Scores

December 16, 2012
Click to use interactive map

By using the interactive map above to look at the top 20 U.S. metro markets (by number of households), you can see Minneapolis, Washington D.C. and Boston top the list with unemployment below 6.6% as well as lower concentrations of foreclosure filings and high average credit scores over 684. Relatively lower unemployment is the common theme that has helped these markets keep foreclosures in check and credit scores elevated in comparison to other parts of the country. Not surprisingly, adding jobs and reducing unemployment remains the key to market recovery.

Unemployment has had a significant ripple effect on local economies and household finances which in turn has impacted housing foreclosures and personal credit scores. Without a job, paying bills becomes challenging. This has been the case in Riverside-San Bernardino, CA, which has been hard hit by the boom and bust of the housing market. With employment previously concentrated in the construction and logistics sectors, unemployment is currently in the double-digits at 13.4%, foreclosure activity tops the list at over 20 filings per 1,000 homes and the average credit score represents the low at 647, according to data collected by RealtyTrac and CreditKarma.com. Through our frequent work within this market, we see the real need to properly identify and target the appropriate segments, price points and homes design elements to find success against the numerous foreclosures competing for the limited amount of active and qualified buyers. Similarly, Tampa is another market in a hard hit region that is showing the effects of a high unemployment rate of 10.8% with and an impacted average credit score of 651.

Other notable observations:

  • Houston’s credit score of 654 is below the national average of 661 although unemployment and foreclosures rank favorably. Our recent field research indicate challenges in qualifying home buyers in the more affordable price segments due to credit and down payment requirements.
 
  • Despite the second highest foreclosure activity, Phoenix’s unemployment rate is on the positive end of the rankings at 8.1% and the average credit score of 658 is just slightly below the national average. Market fundamentals in Phoenix continue to improve after home prices have reset significantly which present potential opportunities.
 
  • The Southern California markets of Los Angeles, Orange County and San Diego have maintained their high average credit scores above 683 while foreclosures and unemployment remain elevated.
 

Analyzing and understanding these unique markets, where they are in the recovery process and appropriate targeting through research is essential to succeed in today’s dynamic environment.

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