Real Estate Sales Hit A 10 Year Low - Almost One-Third Of Buyers In The Last Five Years Owe More On Their Mortgages Than Their Houses Are Worth
It’s no surprise that, despite some folks saying we’ve hit bottom, that prices continue to decline. Though there is some sales activity in both commercial real estate and residential real estate, the residential market is still priced too high, with most sales being short sales or pre-foreclosures.
Bloomberg had this to say:
Existing U.S. home sales fell to a 10- year low in the second quarter and the median price for a single- family house dropped 7.6 percent as the real estate recession deepened.
The median price tumbled to $206,500 from $223,500 a year earlier, the Chicago-based National Association of Realtors said today. Sales of single-family houses and condominiums fell 16 percent to 4.913 million at an annualized pace.
Prices are declining with the U.S. on the brink of a recession, consumer prices rising and 30-year fixed mortgage rates at a six year high last month. A third of all sales in the quarter were foreclosures or “short sales,” in which lenders take a loss on a property, the Realtors said. Bank repossessions almost tripled in July from a year earlier, RealtyTrac Inc., a seller of foreclosure data, said in a separate report today.
A look at your local MLS or Craigslist will undoubtedly yield tons of results where the summary has the word ’short sale’ or ‘foreclosure’ in it. However, it appears even those aren’t selling at the moment:
The number of properties that have been foreclosed on by the banks and still haven’t sold is the highest we’ve ever seen.
U.S. economic growth slowed to 1.8 percent in the second quarter as unemployment rose. Forecasters say home values will drop more. The S&P/Case Shiller home price index that tracks 20 cities may tumble as much as 12 percent this year, McLean, Virginia-based Freddie Mac, the No. 2 mortgage buyer, said in an Aug. 11 report.
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Bank seizures of properties in default rose 184 percent to 77,295 in July, according to RealtyTrac. That was the steepest increase since the Irvine, California-based company began reporting data in January 2005.
More than 272,000 properties, or one in 464 U.S. households, got a default notice, were warned of a pending auction or were foreclosed on, RealtyTrac said. Nevada, California and Florida had the highest rates, RealtyTrac said.
Foreclosures are helping to bring more realistic prices to the market, but as they undercut existing home owners who have not yet entered the foreclosure process, this becomes a case of a self-fulfilling and never ending cycle where foreclosures bring about more foreclosures which will continue to force prices to dive lower.
Smart buyers seem to be waiting things out on the sidelines until this cycle stops or slows.
Foreclosures are depressing home prices, contributing to job losses and weakening consumption as fewer people borrow against the value of their home, New York-based analysts at Lehman Brothers Holdings Inc. said Aug. 7.
A Standard & Poor’s measure of the largest U.S. homebuilders is down 32 percent in the past year as builders have struggled to reduce inventory and cut costs amid waning consumer confidence and stricter mortgage standards.
It takes 10 weeks to 12 weeks on average to sell a house, compared with four weeks or five weeks at the height of the five- year housing boom, according to Walter Molony, a spokesman for the Realtors.
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U.S. home prices fell 15.8 percent in May, the most since at least 2001, according to S&P/Case-Shiller. One-third of home sellers in the second quarter lost money, Zillow.com, a Seattle- based provider of home valuations, reported this week.
Bank seizures, known as real estate-owned or REO properties, are the “fastest growing segment of foreclosure activity,” James Saccacio, chief executive officer of RealtyTrac, said in the statement. The REO properties in the company’s database represent about 17 percent of the inventory of existing homes reported in June by the National Association of Realtors, he said.
Default notices in July increased 53 percent from a year earlier and auction notices rose 11 percent, RealtyTrac said.
Foreclosures could put 8.4 percent of total U.S. homeowners, or 12.7 percent of homeowners with mortgages, out of their homes, according to New York-based analysts at Credit Suisse. About 53 percent of subprime borrowers, those with poor or incomplete credit histories, will have negative equity in their homes this year, and that percentage will rise to 63 percent next year, the analysts said in an April 23 report.
A new housing law is designed to help up to 400,000 homeowners refinance their adjustable-rate mortgages into fixed- rate loans. That law, backed by the Federal Housing Administration, may help borrowers who take advantage of the state relief. Almost one-third of homeowners who bought in the last five years owe more on their mortgages than their houses are worth, Zillow reported.
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