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As a result, the fallout from the housing bubble looks increasingly likely to spread, pushed by a worsening economy, rising unemployment, and what appears to be a "bubble thy neighbor" effect.
Nationally, foreclosure filings rose 9 percent to reach 1.5 million in the first six months of 2009, according to a report released Thursday by RealtyTrac, an online marketplace for foreclosure properties. That's the highest total since the Irvine, Calif., firm began reporting the figures in 2005.
The 'Big Four' effect
What's striking, however, is where that growth came from. Last year, all the growth in foreclosures came from the big bubble states: Arizona, California, Florida, and Nevada. The Big Four saw foreclosures rise to nearly 730,000 in the last half of 2008, up 16 percent from the first six months of that year, according to data calculated from RealtyTrac's report. For the rest of the US, the number of foreclosures actually fell 5 percent to 667,000 during the same period.
Now, foreclosures outside the Big Four are beginning to rise (click on the chart at right). Overall, they climbed 12 percent for the Big Four and 6.5 percent for everybody else. In some states, such as Hawaii (up 53 percent) and Idaho (up 46 percent), they rose faster than any of the Big Four did.
Recession plays a role
The recession can explain some of this shift. Oregon, which saw foreclosures climb 56 percent during the same period, is struggling with the highest unemployment rate of any state except Michigan. South Carolina (foreclosures up 33 percent) has the third-highest state unemployment rate.
But did recession cause Georgia's 18 percent foreclosure spike? True, the state has never recorded such high unemployment, but the rate is roughly on par with the national average. Perhaps its proximity to bubble state Florida (foreclosures up 7 percent) has something to do with it.