Foreclosure Deals

The Trickle Down Effecting High-Tech

The prolonged housing slump is having a measurable effect on the overall economy, and not just on home furnishings and housing supply chains (like Linens N’ Things, which recently filed for bankruptcy protection).

Results of a survey conducted during the fourth quarter of 2007 by The NPD Group, a market research firm servicing the retail sector, revealed a direct correlation between areas hard hit by the housing crisis and a marked decrease in the sale of consumer electronics — like LCD televisions and notebook computers — and related products such as printer ink and paper.

Five of the hardest hit designated market areas (DMAs) were among the top 30 based on population. The five — Sacramento, Tampa, Phoenix, Detroit and Orlando — were also among the nation’s top metropolitan statistical areas (MSAs) ranked by foreclosure rate, according to RealtyTrac, for the quarter studied by The NPD Group.

Sacramento ranked No. 5 on RealtyTrac’s Top 100 metro areas for the first quarter of 2008, reporting a 135 percent year-over-year increase in foreclosure activity and a foreclosure rate of one in every 55 households receiving a foreclosure filing during the period. Detroit was No. 6 despite a 4 percent decline in activity with a rate of one in every 68 households receiving a foreclosure filing. Phoenix was No. 7 with a 294 percent increase in activity on a yearly basis and a rate of one in every 70 households receiving a foreclosure filing during the quarter.

Orlando ranked No. 13 with a 249 percent yearly increase in activity and a rate of one in every 81 households receiving a foreclosure filing, followed by No. 21 Tampa, where one in every 110 households received a foreclosure filing and a 127 percent increase in foreclosure activity was reported from the first quarter of 2007.

The point here is simple. People who bit off more than they could swallow in the last upswing of the real estate market now can’t afford to pay their readjusting mortgages, or their credit card debt, or higher prices on gas and food. So as the effects of the mortgage meltdown continue to trickle down further, how can consumers continue to afford the electronic toys and the supplies for them?

The answer is…increasingly…THEY CAN’T!

We’d be interested to hear your comments on how this trickle-down effect is impacting the market where you live and work, and the ability of homeowners to keep their homes.