Michigan Workers, Pushed Out of Auto Jobs, Lose Houses, Too

By Jeff Bennett

Oct. 17 (Bloomberg) -- Julie Taylor fights to hold back the tears when

she talks about the day in March that she lost her home.

``There was just no other choice,'' the 39-year-old Detroit woman said.

``My husband, Ken, lost his auto job, we couldn't keep up with the

house payments, and before we knew it, we were forced to let the

bank foreclose.''

That sequence of events is becoming increasingly common in Detroit,

epicenter of the U.S. auto industry. As slumping carmakers and their

suppliers slash tens of thousands of jobs, foreclosures in the area are at

an all-time high. Families like the Taylors can't tap their home equity to

keep afloat because the workforce cuts are also dragging down

property values.

Wayne County, home of Detroit and 35 surrounding municipalities, had

the most foreclosed properties in the U.S. in the second quarter,

according to Foreclosure.com of Boca Raton, Florida. Statewide, the

number of homes in some stage of foreclosure tripled in September

from a year earlier, a report by RealtyTrac of Irvine, California, shows.

``It is hard to find someone as hurt as Michigan is,'' said Michigan native

Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago. ``I

am very saddened by what is happening there. It is a tough issue, and

there are no easy answers.''

Wayne County had 2,081 foreclosed properties listed in the second

quarter, Foreclosure.com reported. The next-highest number, in

Chicago's Cook County, was 1,124.

$1,500 Home

The foreclosures are flooding banks and auction houses. More than 600

people crammed into a hotel conference room in the Detroit suburb of

Dearborn, Michigan, this month to bid on repossessed properties.

Dearborn was part of a five-city tour by auctioning firm Hudson &

Marshall to sell 250 foreclosed homes in Michigan.

It was the most properties the Dallas firm has auctioned at one time in

Michigan in the past seven years, said David Webb, a co-owner. He said

he expects to break that record next year.

``In the Detroit area especially, the auto industry is driving the

foreclosures up,'' Webb said.

At the Dearborn auction, a 1,300-square-foot (120-square- meter),

three-bedroom house, in poor condition and an undesirable location,

sold for $1,500. A five-bedroom residence was sold for $350,000.

Detroit-area realtor Kent Colpaert, who deals in foreclosed properties

and sold some at the auction, said many homeowners aren't able to

fetch a high enough price to cover their loans, after taking out

mortgages in the past three years with little or no money down.

Property Glut

``People can't sell their house for top dollar because of the glut in the

market,'' Colpaert said. ``They have to price it more competitively than

they did four or five years ago.''

Colpaert said he has about 375 listings, 10 times his normal load. In four

years, his company has grown to 15 employees from one.

Many homeowners' job losses stem from the declining market share of

Michigan's resident automakers. Detroit-based General Motors Corp.

and Dearborn-based Ford Motor Co. are slashing payrolls to reduce

costs as they lose sales to Asian makers including Toyota Motor Corp.

and Honda Motor Co. Ford, which gave Detroit its Motor City heritage,

laid off more than 4,000 salaried workers in the past year and will drop

10,000 more by April. The second-largest U.S. automaker also expects

to eliminate 30,000 hourly jobs by 2008. GM, the world's largest

automaker, plans to cut 30,000 positions in that time frame.

Cuts at Delphi

Wayne County will lose 5,900 jobs in auto parts and 2,600 in vehicle

assembly this year, according to a report by University of Michigan

economists in April. Among parts makers, Delphi Corp., based one

county north in Troy, will eliminate 20,100 union jobs at the end of this

year and close five plants in Michigan.

Michigan's job losses are a central issue in the governor's race, in which

polls show Democratic Gov. Jennifer Granholm leading Republican

challenger Dick DeVos. About one in seven jobs in the state is tied to

the auto industry, said Ron Thompson, an economist at Global Insight

in Lexington, Massachusetts.

Most of those who find new employment are taking pay cuts. Many

auto workers without college degrees make more than $100,000 a year

with overtime.

``These are upper-middle-income people,'' said Swonk, the Mesirow

Financial economist. ``You can imagine the shift they are going through,

coming from having enough to own a second home and even a boat.''

Julie Taylor said her husband, who used to assemble door- latch

components, was among those laid off by parts makers. She declined to

name his former employer because she still hopes he'll be called back

to work.

Since losing his job in June 2005, Ken Taylor has begun working in

construction. The couple and their 3-year-old son moved into a one-

bedroom apartment in the suburb of Southfield, Michigan.

``Once you lose it,'' Julie Taylor said, ``you realize just how important a

home is in your life.''