Foreclosure and Bankruptcy rises, again
Written by A Forex View From Afar on Tuesday, April 15, 2008Back to www.thelfb.com
According to RealtyTrac Inc, Foreclosure had risen 57% more than a year ago for March, while banks repossessions were up 129% percent year over year, making March the second consecutive month when repossessions jumped over 100%.
The bank repossession are even more dramatic when looked at by State; 619% in Arizona; 597% in New York; 557% in California; and 464% in Florida. These numbers are out of the orbit. Even worse, real estate analyst have come to the conclusion that many homeowners just given up to their house, adding more supply to a weak market.
As home-owners default on their loan, private companies are declaring bankruptcy.
The most bankruptcies filers seem to be from the retail industry. While some small to mid companies start to file for insolvency protection other have started to close stores to avoid such measures.
It is said that Linens ‘n Things will file this weak for bankruptcy protection, affecting 500 stores. Other companies will close stores, in order to optimize costs: Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.
Charming Shops, which own the women’s clothing retailers Lane Bryant and Fashion Bug, are closing at least 150 stores. Wilsons the Leather Experts will close 158. And Pacific Sunwear is shutting a 153-store chain called Demo.
This all means that around 1300 stores will, or already have, closed this year. Assuming these were low-range shops, with an average of 10 employees per shop, it adds up to 13,000 people lost their jobs this year.
There are more chain stores closing, The International Council of Shopping Centers estimates 5700 shops will close their doors this year alone, 25% more then last year.
Now more problems are arising since a retail store can't work on its own. It needs shipping companies, furniture manufacturers, mall owners and advertising agencies to properly work. It looks like it could easily develop into a spiral.
Source:
NY Times: Retailing Chains Caught in a Wave of Bankruptcies
RealtyTrac Inc: Bank-Repossession Beat Continues in March
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