Short Sales and Foreclosed Homes Attack the Market

Home prices have dropped its deepest because of foreclosure. Potential buyers flock to repossessed properties for they are more affordable. Foreclosed homes for sale are now somewhat in demand.

Report say that 20 percent of the nation’s 2008 home sales were repossessed properties and 11 percent are short sales, or mortgaged homes sold for less than the actual debt.

In California, Madera was the hardest hit by these distressed sales with 54 percent of deals were repossessed properties, and 3.4 percent are short sales. Merced and Stockton face a similar scenario with 53.4 and 51.1 percent foreclosed homes and 4.8 and 5.4 percent short sales respectively.

The housing industry has suffered a great loss of $3.3 trillion worth of home equity just this 2008, in which $1.4 trillion was lost just in the last quarter. A total of around $6 trillion has been lost since 2005.

The property value losses put homeowners closer to losing their homes. With almost every home in a financial deficiency, lenders tougher to crack for modifications and bills left unpaid, more properties will soon be lost.

17.6 percent of the whole nation’s homeowners are already facing foreclosure and so are 41.2 percent of the last 5 year’s home mortgages are delinquent.

The Sun Belt Cities like Las Vegas are in worst housing status with 61.4 percent of homes battling foreclosure.

A lot of homeowners own properties worth less than what they owe to the bank, so they are left with the choice but to short sale. It is said that in 2008, 34.6 percent of the country’s home sales were done at a loss.

Short sales now take longer time to deal. Lenders take too much time to settle the difference between what is owed and what the sale brings in especially with home prices dropping further making it more difficult to sell. It eventually ends up in foreclosure.

If the number of repossessed homes continues to increase, homes will accumulate in the market, bringing rock bottom prices and forcing homes into foreclosure. This is a cycle that will not end until a significant move is initiated to stop foreclosure.

Related Posts:

• Repossessed Homes Short Sales on the Rise in California
• Short Sale: One Way for Homeowners to Avoid Foreclosure
• Market for Single Family Repossessed Homes in South Florida Improved
• Tips to Get That Short Sale Done
• Short Sales to Affect Bank Owned Property Lists Only a Bit