Recent economic data shows that not only have foreclosure rates been falling nationwide, but also in northeastern Pennsylvania.
I believe this trend is occurring due to a couple of different factors on the national scale. I am going to break it down by three specific factors, a rise in both home price and personal income coupled with falling unemployment rates.
Since the crash of 2008, most of the previously stated factors bottomed out, and foreclosure rates exploded. This correlation suggests that the three factors above strongly influence the movement of foreclosure rates.
One side note is that there has been a decline in the popularity of buying homes. This nationwide trend ushered in by the children of people whose families lost their homes in 2008, is due in part to a fear of a repeat of the past. You cannot lose your home if you do not own one.
Nationwide unemployment rate has been steadily falling for the past couple of years, and has come to what is called the natural rate of unemployment, 5 percent.
This natural rate is the ideal number for a healthy economy. It leaves wiggle room for people who are in between jobs and holding off for a better offer. Data provided by Economagic.com shows that since 2012, there is been a general decline.
This trend extends into the region defined as the middle Atlantic, where Scranton falls. Unemployment reaching this level is a great sign that the economy has almost fully recovered from the crash of 2008. In short, if people have jobs, they are more likely to pay their mortgage because they have a steady flow of income they can use.
The second macroeconomic variable that I feel has led to this decline in foreclosure rates is a rise in the value of homes. This trend is not necessarily nationwide, but is prevalent in the middle Atlantic region. This seems like an odd correlation, but bear with me. As foreclosure rates fall, the price of homes rises, and vice versa.
The third and final trend is wage growth. Overall, wage growth in the middle Atlantic region has been on the incline for the past five years. This trend is pretty obvious. A people make more money they will pay what they need to pay for, their mortgage, food and other necessities.
The truth is that most people will buy clothes and food before they pay their mortgage to the bank.
A final factor that could be contributing to this is an increase in the protection of squatters and people in delinquency. Laws passed after the crash of 2008 have made it extremely difficult for landlords to evict renters and banks to evict lessees, mortgages holders.
In my opinion, all the above contributed to the decline in foreclosure rates we have been seeing over the past years here in the Scranton area.