Home Prices Fell Due to Increasing Bank Owned Foreclosures

The increasing number of Bank Owned Foreclosures continues to wreak havoc on the housing market as home prices in 20 metropolitan areas in the country slide down further. Economists said that the pace of home price decline in April was the same with previous months as foreclosures inched up.

The Standard and Poor’s/Case Shiller’s index of home prices dropped by 18.6 percent from the previous year following an almost 18.7 percent decline in March. These figures are based on results of the Bloomberg News survey which also showed that consumer confidence increased to its nine-month peak in June.

Studies showed that the increasing unemployment rate, the highest in 25 years, has greatly contributed to the growing number of Bank Owned Foreclosures. The trend is expected to further put pressure on property values in the coming months.

Meanwhile, a slowdown in consumer spending is expected to hinder any economic recovery. According to experts, many Americans affected by the declining property prices are saving more, thus current consumer spending is sluggish.

Barclays Capital Inc. economist Michelle Meyer said that the housing market will continue to remain imbalance due to the flood of Bank Owned Foreclosures. She predicted that home prices will continue to drop in a slower pace even if the economy emerges from the current recession.

Meanwhile, a report from the Conference Board may show that the consumer confidence index rose by 55.3 percent, the highest since its peak in September the previous year.

On the other hand, the total number of foreclosure filings in May inched up by 18 percent. These figures include notices of default and auctions and property repossession. The May figures peaked at 300,000, with one out of 398 houses in some kind of foreclosure proceedings.

The decline in prices caused by repossession is helping strengthen and stabilize foreclosure homes on sale. Resale of homes increased by 2.4 percent last month to 4.77 million. Meanwhile, the median sales price dropped by 17 percent, the third biggest decline on record, according to the National Association of Realtors.

In Las Vegas, Nevada, foreclosures accounted for 73 percent of foreclosures sale last May, representing a 56 percent increase compared with the same month last year. Additionally, Bank Owned Foreclosures sales in California accounted for 51 percent of the total existing home sales, an increase of 40 percent from the previous year.

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