Foreclosures Causing Average Price Of Houses to Tumble

Posted on August 21, 2008
Filed Under Foreclosure Homes |

Foreclosures are dictating the market and causing the average price of houses in USA to tumble. In the second quarter the average prices fell by more than three quarters. This is the latest symptom of the deep malaise in the housing market.

However with the fall of prices the number of houses being sold in this foreclosure climate increased indicating that the purchasers are taking advantage of this low price and discount bonanza.

Nevada and California showed gains in the increasing number of sales in the second quarter as compared to the same period in 2007 according to the findings of National Association of Realtors. In Nevada the sales increased by 18% after the average price of houses fell by as much as 24% in the Las Vegas region. In California the sales went up by 3.7%. In Los Angeles, Riverside and Sacramento the average price has plummeted by 30% according to the data of NAR.

Across the country the sales fell by 16.3% from April to June this year as compared to the second quarter of the previous year. The states that saw the deepest drop in price saw a corresponding increase in sales. Lawrence Yun chief economist of NAR said that the gains in the real estate market have been in those places where the prices have dropped dramatically. “Buyers in these areas are responding to deeply discounted home prices,” he added.

According to NAR the average price of houses (single-family) dropped in 115 of the 150 metro areas during the second quarter of 2008. In 35 metro zones the price increased. It went up by over 7% in Yakima, Washington, Binghamton, New York, Amarillo, Texas, Charleston and West Virginia.

Foreclosures are causing banks and mortgage investors to stumble under the weight of piled up unsold houses. They are drastically slicing off prices to get rid of it. RealtyTrac notes that over 750,000 foreclosed houses are sitting on the shop shelves. This equates to 17% of total number of houses in USA that went up to be sold in July – 4.5 million. Over 272,000 houses received at least one foreclosure notice. This is a spike of 55% from 175,000 foreclosures noted in June 2007. It reads a foreclosure rate of 1:464 nationally in July this year.

Christopher Thornberg of Beacon Economics, Los Angeles commented that the foreclosure crisis has “moved far beyond the sub-prime loans.”

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