Posts Tagged ‘home prices’

Hundreds of Thousands of US Citizens have are disturbed by the fact that they owe more on their mortgage than their property is actually worth. In light of the most recent economic news, it looks like the economy will depress further before it improves. Here are major reason why real estate values will continue to drop.

The Amount of Homes for Sale has Increased over Recent Months. – This is basic economics. When there are more homes for sale than there are buyers, home prices drop. As inventory rises, only the cheapest homes sell. This leads to a decline in the overall price of homes.

Foreclosures Continue to Increase. – Increased foreclosures lower home values in two ways. First, foreclosures cause lower home values by adding to the supply of housing inventory. The people who are foreclosed on won’t be able to buy a house again for years. The fact that most foreclosures aren’t taken care of contributes to the overall effect of lowering values of homes in its neighborhood. Underpriced homes that are selling right now, become the comparables used in future appraisals. When all the homes that sell have low prices, comparable properties must also have low prices for the lender to approve funding.

Economic Conditions Must Improve. – There are still too many American’s who don’t have jobs, or are under employed. Most American’s rely on jobs to provide the money to make house payments. Because almost everyone who buys a home needs a home loan, to buy real estate, people need jobs.

Home Prices are Still Historically Too High. – The Case Schiller index shows that today’s home prices, adjusted for inflation, are still about 30% higher than historic norms. Most modern homes are larger than older homes, but even factoring in home sizes, home prices are still above all time norms.

Real estate is local and each real estate market is unique. Orange County CA Real Estate could increase in value. Newton MA Homes might see large drops in values. Prices of Homes for Sale in Baltimore MD might remain completely stable over the next few years. We don’t know what will actually happen, or how bad things will be, but overall the numbers indicate further declines in home values.

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Home sales increased 35.2 percent in May in California compared with the same period a year ago, while the median price of an existing home declined 30.4 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported on June 25th.

The statewide median price of an existing single-family home increased 4.2 percent in May to $267,570, compared with April 2009.

C.A.R.’s Unsold Inventory Index fell to 4.2 months in May, compared with 8.7 months in May 2008.

“With affordability for first-time buyers at a record high, sales of existing, single-family homes continued to remain above the 500,000 level for the ninth consecutive month,” said C.A.R. President James Liptak. “Buyers are beginning to realize that the combination of favorable home prices, historically low mortgage rates, and first-time home buyer tax credits, may not align again for many years.

LA Times Reported on June 25th:

Southern California home prices may have finally hit bottom, with median values rising last month for the first significant increase in two years, new data show.

“I think we can now say with fair degree of confidence the pace of real home price declines has slowed dramatically,” said Los Angeles economist Christopher Thornberg, who was an early predictor of the housing bubble.

Now, however, some sellers “are realizing the market’s not going to just bounce back” and are starting to sell homes for less than they had recently hoped to get, said T.J. Culbertson, a Beverly Hills real estate broker.

The percentage of homes that sold in June for more than $500,000 rose to about 20% of all homes purchased, up from 18% in May.

In a positive sign, only 45% of the homes sold had been foreclosed upon, DataQuick said, the lowest percentage since July 2008. Foreclosures peaked at 57% of total sales in February, and in May still accounted for half of home sales.