Foreclosures new hot spots

The new foreclosure plague is tied more to the economy than bad mortgages. Here are 10 cities where defaults grew the fastest in 2009.

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Boise, Idaho
Foreclosure rate: One in every 21 homes
Percent increase from 2008: 103%
National rank: 24th
Unemployment rate: 10.1%

Boise's population has more than doubled since 1980, and its economy has diversified over the past half century. Tech industries have come into the mix, and Micron Technology is now the city's largest employer.

As in many Western cities, the real estate market here was quite volatile during the boom. The median home price jumped from about $150,000 during 2003 to $260,000 at its peak in 2006, according to the Wells Fargo-National Association of Home Builders housing opportunity index. Since then prices have dropped more than 32%.

Christine Loucks, an economics professor for Boise State University, attributes the foreclosure runup in town to two main causes: A small speculative bubble that has burst and the economic slowdown.

"With the rapid population increase, there was strong demand for housing," she said, "and that led to buying for speculation."

When prices started to slow down, the speculators pulled out, driving prices down further and trapping some buyers underwater. Many flippers were caught in the downswing and lost their homes.

Job losses also began to mount. Micron laid off 1,500 to 2,000 workers, HP slowed some of its operations, and the financial and construction industry employers also cut jobs.

"Residential construction just stopped," said Loucks.

Add it all up and Boise went through a similar -- though less severe -- cycle as frothier markets in California, Nevada, Florida and Arizona.
NEXT: Provo, Utah
Last updated February 01 2010: 3:46 PM ET
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Source: RealtyTrac
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