I want to add:
It is impossible to discuss this recession without acknowledging the role that the mortgage/real estate crisis has played. In this area, I believe that smaller, more conservative Midwestern communities will probably end up weathering the storm easier. My understanding of the mortgage crisis is pretty limited, but basically, I understand it like this: In order to get the most house for the money, consumers were urged to take advantage of a lot of alternative mortgage products, like ARMs and "interest-only" mortgages. These mortgages are generally marketed towards people who are poor credit risks, but they've been used by many people in order to finance homes that, frankly, they couldn't afford. Now interest rates are rising and many of these people are finding that they REALLY can't pay their mortgages. In addition, rising fuel costs are leading to corporate cutbacks and layoffs, so the consumer simply lacks the money. So the homeowner is now trying to find a place to rent, but so is every OTHER homeowner who had the same type of loan, so rental values are shooting up. Then homeowners who try to sell their house to move are finding that they're "upside down" in their house because three of their neighbors' homes were repo-ed in the last six months.
These mortgage products were marketed extensively to lower-income, poor credit people, and they were marketed primarily in major real estate markets. ARMs and interest-only loans are VERY rare here in the Texas panhandle, and I know they're not common in the Midwest, particularly in smaller cities. In fact, I remember when everyone was jumping on this ARM bandwagon--most of my friends in Kansas said it was stupid because interest rates were artificially low and would certainly rise again in the next 20-30 years. In other words, they didn't GET these ARMs and interest-only gimmicky loans.
This is realty-trac's foreclosure map. Look at the geographic distribution of foreclosures:
http://www.realtytrac.com/blog/photo.../original.aspx
Foreclosures are highest on the coasts, particularly in the West. This is going to have a big impact on the economy in those areas.
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