Listings Foreclosures - Read the Latest Foreclosure Listings News.

Once again, the foreclosure crisis took a bite on the housing market and this time, prices of homes in foreclosure listings bore the brunt of its attack.

As demand declined and foreclosures increased, prices of distressed homes in foreclosure listings in 20 cities across the United States dropped by 19 percent in the first month of 2009 over the previous year. The percentage drop represented the fastest decline on record.

In December 2008, prices of homes in foreclosure listings dropped by 18.6 percent. The decline in home listings prices has been going on every month since the start of 2008.

Experts pointed out that the flood of unsold properties in the market may continue to drive home prices down, reduce household wealth and consumer spending.

On the flip side, sales of new homes and pre-owned houses increased in February of this year. This indicated that the housing crisis, which has been going on for four years now, may be easing a bit as government efforts to ease credit and help troubled borrowers may be showing their intended purpose.

However, Barclays Capital Inc. economist Michelle Meyer cautioned that the downward momentum has just started and prices of homes in foreclosure listings will start to stabilize on the second six months of 2010.

She added that the drop in prices of homes in foreclosure listings will continue to dampen the household balance sheets.

According to economists, the median forecast for prices of homes in foreclosure listings will show a drop of 18.6 percent over the previous year.

In January of this year, home prices declined by 2.8 percent compared with 2.6 percent dropped in December of last year.

Meanwhile, all 20 cities included in the price index showed an annual decrease in January. Some of the cities leading the home price drop are Phoenix, Arizona by 35 percent and Las Vegas, Nevada by 32.5 percent.

MacroMarkets LLC chief economist Robert Shiller did not give much hope on the current home price trend, but was somehow optimistic that prices would stop declining at some rate.

Already, reduce borrowing costs and low home prices are attracting homebuyers. The affordability index of the National Association of Realtors showed an increase in February.

On the other hand, RealtyTrac data showed that foreclosure rate in February surged to 29.9 percent compared with the previous year. One out of 440 houses is in some state of foreclosure process.

If you are an investor looking for opportunities in the real estate sector or a prospective homeowner looking for a more affordable property to buy, now is the time to buy. The low home prices due to large numbers of foreclosure listings will enable you to earn a profit even after spending for repairs.

Rick Sharga, an executive of foreclosure tracking firm RealtyTrac, said investors can make money from the rising numbers of foreclosure listings if they do their research and if they have the finances to wait for some more years before selling. He advises against investing through flipping because he expects the market to continue to be flooded with home foreclosure listings.

Sharga said that despite nationwide foreclosure prevention initiatives, repossessed homes would continue to be added to foreclosure listings because of continued job losses and business closures. He said the February total of 291,000 units added to foreclosure listings indicates that foreclosure auctions will not end soon.

Hence investors taking advantage of low prices should have the financial resources to wait for a couple of years and should have backups in case they are laid off. Investors should have adequate money for the monthly mortgage payments in case they can not find renters. They should also make sure that the property has no outstanding tax lien or any other lien and that what they are buying is a first mortgage and not a second mortgage.

Additionally, there are other important things that you need to consider before investing in properties from foreclosure listings.

First, consult with a reputable real estate agent about foreclosure listings, prices, home sales and resale prices in the neighborhood and in nearby communities. Ask how long rental properties and resale properties are marketed before they are taken. Next, hire a general contractor to inspect the property and estimate the cost of repairs. Finally, calculate your total outlay by adding up your down payment, repair costs, marketing costs and monthly payments for the expected period there are no renters.

While buying properties from foreclosure listings might not be very comfortable because of the thought of families being evicted from foreclosed homes, investing in distressed properties helps rejuvenate the housing sector and ultimately contributes to economic recovery.

The main tool used by real estate professionals in appraising properties in foreclosure listings is sale prices of houses in the area. They will compare the market prices of similar houses in nearby areas to houses in foreclosure listings that they are appraising to get a comparable amount.

However, with sales volume declining rapidly, there are fewer houses to be used as comparison to determine the market value for houses in foreclosure listings.

As of January 2009, new homes sales dipped to a 45-year low while sales of existing homes declined to a lowest level in 12 years.

The difficulty of appraising houses in foreclosure listings has made it hard for distressed homeowners to refinance and buyers to acquire homes.

Because appraisals are based on market value estimates at given time, a reliable baseline is hard to determine with prices of distressed properties in foreclosure listings falling rapidly.

Miller Samuel President Jonathan Miller pointed out that credible home values are hard to determine and closed sales are becoming irrelevant because they are lagging behind the market.

Some real estate appraisers who cannot use good sales figures opted to consider contract prices when appraising homes, especially those in foreclosures. These contract prices are the amount first agreed between the seller and the buyer. However, there may be flaws on this way of appraisal because many sales do not close.

According to Miller, foreclosure listings prices are not reliable because majority of sellers overvalued their properties.

This tendency of sellers to overestimate the market value of their properties is called by Eric Johnson, a Columbia business professor, as endowment effect. This so-called endowment effect causes homeowners to overprice their properties, and as a result, a big discrepancy between the sale price and list price is created.

With foreclosures wreaking havoc on the housing market and more and more homeowners finding difficulty refinancing their mortgages or buying a new home, appraisers are feeling the pressure to be conservative on their estimates.

Real estate appraiser Joni Herndon explained that lenders prefer appraisals to be at the lowest end of the price range.

In the event that lenders reject the appraisal, they can call for a second appraisal, or the seller can reduce the price of the property or the buyer could produce more cash.

Another appraisal option is automated valuation model that sets home values using a mathematical formula.

Finding the right appraisal is deemed important now that the federal government has unveiled its Homeowner Affordability and Stability Plan which offers refinancing and loan modification plans.

A rising number of renters across the country have been made homeless because of the sudden inclusion of their rental homes in foreclosure listings. Oftentimes, they do not know their units have been foreclosed until they are evicted from their units.

The continuous addition of homes to foreclosure listings across the country has sparked the creativity of several people and companies out to swindle homeowners in one of the most vulnerable periods in their lives.