Housing Shows Economy Affecting People Differently (Wisconsin Home Sales, Foreclosures Both Rose In July)
WISC-TV (CBS/Madison, WI)
24 August 2011

MADISON, Wis. -- Wisconsin home sales and foreclosures both rose in July, indicating the economy is further dividing people after the recession.

Home sales surged 34.4 percent from a year earlier, although Realtors cautioned the comparison wasn't accurate because July 2010 was the month after the federal government's tax credit for first-time homebuyers expired. Meanwhile, there were 4,534 foreclosures in July, also up from a year ago as banks continue to sift through the number of distressed homes.

The numbers show a difference between the "haves" and "have-nots," University of Wisconsin-Madison real estate professor Morris Davis said.

"How can we have rapid home sales on one hand and high foreclosure rates on the other hand? The reason is that these are two different groups of people," he said, adding that the downturn has most affected those with a high school degree or less.

Record-low mortgage rates will help people looking to buy a new home, such as Justin and Rachel Barnes.

"I think that's the driving force for my husband, and I think more space is the driving force for me," Rachel Barnes said.

The couple's starter home on Madison's near West Side was perfect, but the addition of two children to the family makes things cramped, she said.

"We like to have grandmas and grandpas visit, and we'd like for them to have a place to stay," she said. "They always have to get a hotel room when they come."

But for others, it's not about upgrading their home. It's about economic survival.

"It's like a punch in the stomach," Verona area resident Kim Wolfe told WISC-TV in July, after she missed a mortgage payment for the first time. "It's the first time I've been unemployed, ever."

Wolfe had applied for the federal government's Emergency Homeowners Loan Program, which helps struggling families make their mortgage payments. The process was competitive, and program officials notified those who qualified this week about their status, said Ellen Bernards of GreenPath Debt Solutions in Madison.

If a Madison-area homeowner received that notification and applied through Greenpath, Bernards said they must call 1-888-893-2711 as soon as possible, because the government will hand out the funds on a first-come, first-served basis. Foreclosures, which have continued to climb after the recession ended in 2009, will stay well above normal for years, Davis said.

"Housing prices fell a lot, so many people own houses that are worth less than their mortgage, and unemployment rates are high," Davis said. "Historically, those are the two things that cause a foreclosure."

Wisconsin's unemployment rate rose to 7.8 percent in July after businesses shed 12,500 jobs, according to data from the state Department of Workforce Development. About 8,400 Wisconsinites left the labor force in July, an indication that those people feel less confident about finding work quickly.

Even for the Barnes family, looking to buy a home comes with uncertainty.

"I think we just have to be safe with our money and make sure we put 20 percent down and don't overextend ourselves," Rachel Barnes said. "This next house will hopefully be a house that we're in for awhile."

To see an interactive map of Wisconsin foreclosures, go to www.realtytrac.com/trendcenter/wi-trend.html.