Early 2010 signaled a recovery in jobs and an overall improvement in the overall United States economy. Many pundits believe 2009 represented the rock bottom for everything from real estate to the stock market. If that is the case, why do foreclosures continue to rise?
Foreclosures: Lagging Economic Indicator
The major reason foreclosures continue to rise while the economy improves is because foreclosure are a lagging indicator of economic health. For example, if a homeowner loses their job, they don’t simply default that same day. They use up their savings, then they borrow from friends and family, then make partial payment and finally, they stop paying all together. After that it still takes three to four months to start the foreclosure process. Therefore, the foreclosures that happen today are really a result of the bad economy of six months ago.