Real Estate Prices See Dramatic Drop Nationwide For 2011
Real Estate prices in the US have double-dipped nationwide and are now lower than their March 2009 trough according to a new report from Clear Capital. It was inevitable, and it was predicted. Sales of bank-owned (REO) properties hit 34.5% of the market, according to the survey, resulting in a national price drop of 4.9% quarterly and 5% year-over-year. National home prices have fallen 11.5% in the past nine months, a rate not seen since 2008. Add short sales, where the bank allows the borrower to sell for less than the value of the mortgage and prices have nowhere to go but down.
With more than one-third of national home sales being REO (bank owned), market prices are being weighed down as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales. While the usual subprime mortgage suspects, like California, Arizona, Florida and Nevada used to rule the foreclosure roost and still have high volumes of distressed properties, the mid-west is seeing a surge in REOs now-thanks to the plain old recession. 40% of the Chicago realty market is foreclosures, 43% in Cleveland and 51% in Minneapolis. Home prices fell 8.7% in the Mid-West during the past three months compared to the previous quarter.
While the foreclosure crisis is abating on the front end, with fewer loans going newly delinquent, the pipeline of seriously delinquent loans is enormous. Banks are now ramping up the foreclosure process after the “robo-signing” paperwork scandal, but at their current pace it would take about four years to process all the bad loans through foreclosure and even longer to sell those homes out on the open market.
Buyer demand is rising, thanks to a slowly improving jobs picture, however mortgage availability is still difficult for the low to middle-income borrower, and falling prices don’t help consumer confidence in the housing market.
