Foreclosures Continue to Put a Damper on Home Prices

Funny thing is there is still a massive log jam of NOD/auction homes not making it to the market nor are they going back to the lenders.  The % of postponed auction properties ranges from 91-95% depending on the city and county here in most southern California markets.  How it will loosen up or when it will loosen up is anyone’s guess.  There is a lot of speculation with individual and group investors buying to flip which makes me think “hey is that how we got here in the first place?”  Unemployment at record levels, job loss still topping the daily news stories, national healthcare plan proposed..hey it is a great time to speculate.-Sean

Home prices continued to decline across the nation as sales of heavily discounted foreclosed properties weighed down the market.

Median prices of existing homes fell in 123 of 153 metropolitan areas during the third quarter compared with a year earlier, according to the National Association of Realtors. The national median price was $177,900, down 11.2% from the third quarter of 2008.

Distressed sales — mainly foreclosures and short sales — accounted for 30% of transactions in the third quarter, according to the NAR, which pulled down average prices because foreclosed homes sell at steep discounts. Short sales are transactions in which at-risk borrowers sell their homes for less than the loan amount, with the lender’s approval.

Metropolitan areas in Florida and Nevada continued to see the most severe price declines. In the Cape Coral-Fort Myers area, median prices were down 40% during the third quarter from a year earlier, to $98,000. In Las Vegas, median prices were down 34.5% in the third quarter to $138,500. In 2006, median prices were $268,200 in the Cape Coral-Fort Myers area and $317,400 in the Las Vegas area.

Still, home sales rose 11.4% nationwide to a seasonally adjusted annual rate of 5.3 million units during the third quarter, up from 4.76 million units in the second quarter.

See List of Home Prices

• See full chart of home prices in 153 metro areas.

Lawrence Yun, the NAR’s chief economist, attributed rising sales to the federal tax credit of up to $8,000 for first-time home buyers. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said in statement.

President Barack Obama signed a bill last week extending and expanding the federal tax credit to include buyers with higher incomes and those who are existing homeowners.

Mr. Yun said that while foreclosures will continue to depress the market, “rising sales from the expanded tax credit should buy drugs on line stabilize home prices by next spring.”

Source article http://online.wsj.com/article/SB125790574094242915.html?mod=WSJ_hps_sections_realestate