Home foreclosure rates go up and prices drop
House prices are still decreasing in the U.S. And foreclosure rates are increasing. This should make home buyers happy. However, should you be looking to sell, it may be advantageous to wait a little longer.
Huge drop shown on report from FHFA
The home-price index fell faster than it has since 2008 in the first quarter according to the Federal Housing Finance Agency. There was a 5.5 percent decline from last year. This is because prices went down 2.5 percent in last quarter. Only homes covered by Fannie Mae or Freddie Macwere in the report. It doesn't record cash only sales. They are out totally.
Foreclosures remain a key factor
FHFA acting director Edward DeMarco said, "In many local real estate markets, particularly those hit hard by this cycle, foreclosures and other distressed properties are still a key factor in recorded and anticipated future sales and may be delaying price stability or recovery." There has been a decrease in the price individuals are willing to pay for foreclosures. It has been going down considerably, RealtyTrac explained. The average sales price was $168,321 during the first quarter, which is a 1.89 percent drop from the previous quarter, and 1.46 percent from a year ago. The rest of the homes are worth less since foreclosures lower the value of homes in the neighborhood.
Who is getting the foreclosures?
James Saccacio is the CEO of RealtyTrac. "While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties were sold to third parties," he said. There was a 16 percent decline from the last quarter and 36 percent drop from a year ago in the number of homes sold to 3rd parties which was at 158,434 in the first quarter.
States have different foreclosure rates
The percentage of houses on the market from foreclosure is different in every state. In Ohio and Illinois it was 41 percent. A 45 percent rate was shown in California and Arizona. It was really bad in Nevada. About 53 percent of the industry accounted for foreclosures.
Worry about scams in the foreclosure industry
There have been more foreclosure scams recently. These scams involve upfront fees for promises of foreclosure prevention that never occur, leaving the distressed homeowners high and dry. In February the Federal Trade Commission started prohibiting upfront fees to negotiate mortgage reduction plans.
Citations
Wall Street Journal
blogs.wsj.com/marketbeat/2011/05/25/home-prices-fall-at-fastest-pace-since-late-2008/?mod=google_news_blog
DS News
dsnews.com/articles/home-prices-post-biggest-drop-in-two-years-as-foreclosures-depress-market-2011-05-26
DS News
dsnews.com/articles/home-prices-post-biggest-drop-in-two-years-as-foreclosures-depress-market-2011-05-26
Daily Finance
dailyfinance.com/2011/05/27/foreclosure-prices-fall-again-how-your-state-stacks-up/
View answers to similar questions
Are UK house prices any closer to recovering?
Taking the UK as a whole, the price of an average 3 bedroom property is still being promoted at an average of £160,000.
This is less than ten percent down from the pre-crash high in 2007.
But the hidden, unreported reality is that these current average prices are totally unsustainable in our present economy. Unemployment is rising, wages and salaries are frozen or being cut, while inflation is running at a minimum of 5%. This means real take-home pay is falling and falling.
More and more homeowners are struggling with personal and mortgage debt and their home values, as they're currently perceived, are completely unrealistic.
For those of us who know what's really going on, we're expecting this current average property price of £160,000, will drop 40% to a floor of £96,000 before a sustainable recovery can begin to emerge.
The same is true of commercial property assets that are still grossly over-valued.
At the moment, banks are falling over themselves to try and keep homeowners in their homes and at least paying something, otherwise foreclosure rates would be sixty times higher than they presently are.
Our best guesstimate is that nearly 70 percent of all mortgage payers in this country are sitting on negative equity. We've avoided a depression but until the market catches up with reality and selling prices start reflecting where the UK economy really is, there won't be a recovery in house prices until 2025 at the earliest.
Response to Cornelius: You're right of course, but this correction has to be managed carefully or this Country will end up in a major recession.
Trouble is, anyone who buys a home at a price that is higher than a 40% drop on the peak 2007 valuation is going to lose a lot of money.
Buyers are going to have to be tough and do their homework...
And This is a bad thing why?
The only losers are the speculators, lower property prices make homes afordable to people who want homes not property. Another 50% below your figure would be even better.
Try getting the property obsessed media to report price drops as anything but doom and gloom. Why don't they report a fall in house prices as a GOOD news story, because for many people it is.
Edit
Why? A house is most peoples biggest purchase and they are conditioned to expect it to make a profit. Yet their second biggest purchase sits outside their house on four wheels and looses £400 a month in value and no one turns a hair. Loose £4800 a year on your car and that's not a problem, Loose £1000 a year on the value of a house and people act like Armageddon is just round the corner.When will the UK house price correction bottom out?
Taking the UK as a whole, the price of an average 3 bedroom property is still being promoted at an average of £160,000.
This is less than ten percent down from the pre-crash high in 2007.
But the hidden, unreported reality is that these current average prices are totally unsustainable in our present economy. Unemployment is rising, wages and salaries are frozen or being cut, while inflation is running at a minimum of 5%. This means real take-home pay is falling and falling.
More and more homeowners are struggling with personal and mortgage debt and their home values, as they're currently perceived, are completely unrealistic.
For those of us who know what's really going on, we're expecting this current average property price of £160,000, will drop 40% to a floor of £96,000 before a sustainable recovery can begin to emerge.
The same is true of commercial property assets that are still grossly over-valued.
At the moment, banks are falling over themselves to try and keep homeowners in their homes and at least paying something, otherwise foreclosure rates would be sixty times higher than they presently are.
Our best guesstimate is that nearly 70 percent of all mortgage payers in this country are sitting on negative equity. We've avoided a depression but until the market catches up with reality and selling prices start reflecting where the UK economy really is, there won't be a recovery in house prices until 2025 at the earliest.
The media is to blame for the current housing problems with it's scaremongering about crashes and double dips etc.Homes in our area are selling at around the 2008 prices so not much of a crash as a levelling out of prices and no big increases.Nobody unless they are desperate is going to sell their home for less than they paid for it so talk of all these cheap properties and repossessions available don't live in our area (lincolnshire) where properties were fairly low compared with the national average anyway.
The only people in negative equity are those who bought using a 125% mortgage and borrowed through schemes that gave them their deposit as well which was financial suicide in a good market never mind a depressed one.
Oh dear house prices still decreasing in the states.
If it is that bad to sell then may be it would be a better idea to rent the property out or depending on how much they will loose sell it.
Jamie