Posts (RSS)20 Cities Showed Drop in Foreclosure Listings Prices
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.