House prices drop as foreclosure rates go up

The price of homes continues to fall in the U.S. as foreclosure rates grow. This is awesome news for home buyers looking for a deal. Sellers, however, would be advised to give it more time.

FHFA report shows distinct decline

According to the Federal Housing Finance Agency, there was a huge decline in the home-price index this quarter. It fell faster than any time since 2008 falls. Prices have fallen 2.5 percent in the last quarter, which is a decline of 5.5 percent from last year. Only homes covered by Fannie Mae or Freddie Macwere in the report. Cash only sales are also not in the list.

Problems brought on by foreclosures

Edward DeMarco is the FHFA director right now. He 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 people are willing to pay for foreclosures. It has been going down substantially, RealtyTrac explained. During the first quarter, the average sale price was $168,321 which dropped 1.46 percent from a year ago and 1.89 percent from the quarter before. And because foreclosures lower the value of other homes in their neighborhood, they affect the rest of the index also.

3rd parties not as involved in foreclosure process

“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,” reported James Saccacio, the CEO of RealtyTrac. There was a 16 percent decline from the last quarter and 36 percent decline from a year ago in the number of homes sold to third parties which was at 158,434 in the first quarter.

Foreclosures in states are different from one another

Foreclosure rates depend on the state. Some have more while others have less. Both Ohio and Illinois had the same. It was 41 percent for both. California and Arizona had foreclosure rates of 45 percent. About 53 percent of the industry was foreclosures in Nevada.

Worry about frauds in the foreclosure business

A lot more foreclosure scams have come about. They are sometimes hard to see. Some businesses promise to protect from foreclosure for an upfront fee. The homeowners end up with nothing. Mortgage reduction plan negotiations can’t have upfront fees anymore with a requirement made in February with the Federal Trade Commission.

Articles cited

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/