Bottom Fishers Snap Up Foreclosures
Boosted by bottom fishers snapping up foreclosures and by incentives for first-time buyers, the number of U.S. homebuyers who purchased an existing home in April surged 6.7 percent! Thats the largest monthly increase in more than seven years. The big boost probably reflects the $8,000 tax credit for first-time homebuyers coupled with low interest rates and even lower home prices. Clearly, we are now in a bottoming process and the stock market seems to confirm.
But prices continue to decline. Sales foreclosures and other distressed have even seen bidding wars in places like Vegas, Phoenix and Miami. But the market for high-end properties is DOA.
Job loss has caused good mortgage defaults to overtake the sub prime numbers. Whats going on is enourmous oin size. Obama is doing a complete rehaul of the auto industry. This amounts to remaking our industrial base, all in a matter of months. The same is happening to our financial services industry. The dislocations taking place will continue to cause job loss and that will drive foreclosures. NAR reports that the national median sales price in April plunged more than 15 percent year over year , making it the second largest price drop on record.
All in all its good news. But the underlying fundamentals cannot be ignored. These results are generally unspectacular and homes, apartments and commercial are still deteriorating. Real estate still shows large y/y declines in property values and commercial loan delinquencies are increasing every quarter.
As property values fall its a race between a supply surge and newbie demand.The bottom may be in sight in some places, but nationally home values are in decline. If you look at the broad middle market, price adjustment has a long way to go because of this whole inventory thing. Until we see some real price stabilization the supply side is winning.
Howard Bell
A web site of over 450 articles related to real estate focused primarily on property management.
Your Property PathSFhttp://yourpropertypath.blogspot.com/
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