Home Prices Slid Down in September
Some bad news again for sellers. According to CoreLogic’s September Home Price Index, home values dipped 1.1 percent compared to the previous month. On a year -over-year basis, prices were down 4.4 percent, according to the report. The numbers are astounding when compared to the glory days of the housing b
oom. When distressed sales are included, prices plummeted 31.2 percent when compared to Spring 2006. Lucrative interest rates have failed to lure in buyers and drive up demand and prices. The market is still taking a battering from high unemployment rates, strict lending practises and anxious buyers preferring to rent than own. Looks like the sad news will continue for a while.
“Home sales are down in September and the inventory of homes for sale remains elevated,” said Mark Fleming, chief economist at CoreLogic in a press release. “Home prices are adjusting to correct for the supply-demand imbalance and we expect declines to continue through the winter. Distressed sales remain a significant share of homes that do sell and are driving homes prices overall”.
Foreclosures Continue to Climb
Distressed properties drag down prices, and judging by the latest figures it looks like it will be a while before home prices climb upward. According to new data released by RealtyTrac Inc
., foreclosure activity in October jumped 10 percent compared to the previous month. That translates to more than 77,000 properties receiving an initial default notice, according to the Associated Press
. The big jump is a sign of the market resurfacing after the slowdown last year caused by problems related to shoddy mortgage paperwork , the AP said. Financial institutions put a hold on foreclosure processing as they reassessed and refiled documents. They seem to have finally caught up and are now aggressively confronting the backlog. While things look bad in the short term, this does bode well for the future. As long as foreclosures exist, it will continue to drag down existing home values, so experts say it’s better to have the market cleared soon.
“We all know that there is an underlying amount of properties that need to go into foreclosure and the sooner we clear that the sooner we can get housing to a normal level,” RealtyTrac CEO James Saccacio said to the AP. Florida, Pennsylvania and Indiana led the nation with the highest numbers of foreclosures.
Homes in New York, L.A. Boston Still Expensive
While the rest of the country is experiencing rock-bottom home prices,. there are still some areas in New York
, Los Angeles
that are off limits to many potential buyers. According to the New York Times
, home prices have climbed higher in these cities and their surrounding areas compared to the time of the housing bubble. The prices are also higher relative to local income. Which means professionals in the area, who otherwise make decent money, can’t afford a down payment.
Mortgage Rates Dip Again
This week, mortgage rates slipped below 4 percent ,again touching a historic low. Rates on 30-year fixed-rate plans are selling at 3.99 percent, according to Freddie Mac. The rates on 15-year fixed-rate loans also dipped from 3.31 percent to 3.30 percent. While this is good news for homebuyers, it’s no way an indication that anyone can walk away with these rates. Lending institutions are following very strict guidelines and the glut of underwater homes are still weighing down heavily on the market.
Add to that, unemployment and depleting consumer confidence, and these otherwise appealing rates do little to boost the economy.
“Low interest rates are having hardly any effect,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, told Bloomberg. “They might help a little, but so little it doesn’t show up in the data. Maybe the data would be worse if mortgage rates were 5 percent.”
Homeowners Owe More Than Their Properties Worth
Property values continued to dwindle in the third quarter, according to Zillow Inc. The number of borrowers with negative equity climbed two percent from the previous quarter to 28.6 percent. That’s considerably up from 23.2 percent a year ago. The numbers increased because was mentioned earlier, banks were treading slowly as they examined mishandling of foreclosing documents.
“We still have very high negative equity rates,” Stan Humphries, Zillow’s chief economist told Bloomberg. “That’s putting extreme pressure on households because temporary job losses translate into foreclosures at much higher rates when the household is in negative equity.”
The Zillow Home Value Index dropped 0.2 percent from the second quarter and 4.4 percent from a year earlier, Bloomberg said. And 105 of the 157 markets measured saw a decline in home values from the previous three months. Among the 25 bigger cities, the only increases were recorded in Detroit, Boston, Denver and Pittsburgh.