Foreclosure sales left their mark on Mecklenburg County in 2010, affecting all parts of the county.
Some areas have been hit harder than others, though.
A Mecklenburg Times review of residential and commercial foreclosure records through Dec. 14 shows the five ZIP codes with the highest number of foreclosure sales in the county for 2010 have been 28215, 28269, 28216, 28214 and 28227.
According to those in the homebuilding industry, there’s a reason those areas were buzzing with such sales this year: They’re where the building boom was booming the most, with new neighborhoods featuring so-called “starter” homes for, in many cases, first-time homebuyers.
Some, like Mark Baldwin, executive vice president of the Home Builders Association of Charlotte, point to adjustable-rate mortgages as the reason for many of the foreclosures.
“When the ARM hit and interest rates went so high, many people couldn’t afford their homes and walked away,” he said.
There’s something else in common with the top five ZIP codes, said Dan Markham, a Realtor with Coldwell Banker United Arboretum in Charlotte.
Many of the properties in the hardest hit areas were lower in price, specifically $150,000 or below, a market that generally attracts more first-time homebuyers, Markham said.
The busiest areas for foreclosures also have been those with newer housing developments that are under 10 years old, he said.
“They would have experienced a lot of easy sales and easy financing for homebuyers, many of which probably would not qualify in today’s market to purchase,” he said. “But they were able to purchase then because of lower restrictions for qualifications and other various programs.”
The top five
The top five ZIP codes form an arc to the north of Charlotte.
Real estate industry officials say those areas had seen a frenzy of construction. But those areas have been hurt during the economic decline that partly resulted from subprime mortgages and skyrocketing foreclosure rates.
Of the top five, the ZIP code with the largest number of foreclosure sales so far in the county in 2010 is 28215 in east Charlotte with 514 sales.
Part of the University City area in ZIP code 28269 had the second-highest number of sales with 502. West Charlotte, ZIP code 28216, and Paw Creek, ZIP code 28214, were third and fourth with 476 and 370 foreclosure sales, respectively. ZIP code 28227, or the Mint Hill area, had 328 sales, earning it fifth place.
‘The same areas’
Interestingly, Markham said, the areas in the arc have historically had higher foreclosure rates.
“It was not unusual in the past, prior to the recession, that a lot of the same areas would be more pronounced in the number of foreclosures than in the southern hemisphere,” he said, referring to communities to the south of Charlotte. “It’s more or less the same areas, because of the same basic issues. It is enlarged now because of the market problems.”
Markham said many builders who targeted the housing market catering to lower incomes offered specials and incentives during the housing boom, allowing buyers to take on a loan with little or no down payment. Those buyers would receive a mortgage with an interest rate that would ultimately balloon, which was a “recipe for disaster,” he said.
Also, many of the lower-end housing markets, such as the ZIP codes with the highest foreclosure sales, attract blue-collar workers, a demographic that was especially hard hit by the economic downturn, he said.
Rory Cummins, a Charlotte investor, landlord and general contractor who runs a website that acts as a resource for the local real estate industry, agreed that the northern areas of Charlotte have historically had higher foreclosure rates.
“It’s always been a problem,” Cummins said. “Those areas have always been high, even in 2005 and 2006. Now those areas are even worse.”
First-time buyers, job losses blamed
Cummins partially blames first-time homebuyers and vacant rental properties for the rise in foreclosure sales in the five ZIP codes.
But Charlotte real estate agent Bonnie Downey, who works with foreclosed properties from Fannie Mae, said job losses were the primary reason the five ZIP codes were at the top for foreclosure sales.
Downey said she heard stories about job losses and reduced work hours from residents of 28215, 28214 and 28216. Markham said he heard the same thing.
“Those areas seemed to be more affected by a cut in income,” Downey said. “That’s where I noticed it the most.”
Carroll Jenkins, a real estate agent for Coldwell Banker Ballantyne, agreed that a declining job market was a big problem in the parts of the county that were hit hardest by foreclosure sales in 2010.
Like others in the industry, Jenkins said it became too easy for many people to get a mortgage.
Fewer sales in south Charlotte
As for why some of the ZIP codes to the south haven’t seen as many foreclosure sales recently as their northern counterparts, Jenkins said manufacturing and freight-related shipping jobs are in south Charlotte.
“There is no freight in north Charlotte,” he said. “So manufacturing is out there in Area 7.”
Area 7, a term used by Mecklenburg County real estate agents, is in the Steele Creek region to the southwest of Charlotte. That area, Jenkins says, has more wealth.
Wealth distribution has played a role in foreclosure sales rates, Charlotte real estate industry officials say.
Downey said some areas, such as ZIP code 28214, were eligible for more city programs offering grants for builders to construct homes for disadvantaged, lower-income families.
But even areas known for high-end homes, such as Dilworth and Ballantyne, which have had fewer foreclosure sales than most areas, have seen some increases, Cummins said.
While the amount of foreclosure sales in the top five ZIP codes came as no shock to some real estate experts, Downey said it was a revelation that University City was on the list as having the second-largest amount in 2010.
“That surprised the devil out of me,” she said. “The university area has a lot of strong homes.”
Tara Ramsey can be reached at [email protected].