Foreclosures Can Only Bring Home Prices Down

FOR IMMEDIATE RELEASE
Waldorf, Maryland, United States of America (Free-Press-Release.com) January 5, 2012 -- Based on the November 2011 national Fiserv Case-Shiller home price indexes, the double-dip in the U.S. home prices that started in 2010 continued to take home prices lower this spring and summer.

Based on the data from the National Association of Realtors (NAR), as of November 2011, the national median existing-home price for all housing types was $164,200 or down by 3.5 percent from last year. The realtors association added that distressed homes, meaning those foreclosures and short sales normally sold at deep discounts, accounted for 29 percent of sales in November 2011.

The home prices across the U.S., according to Fiserv, will decrease by 3.6 by the second quarter of 2012.

The huge number of distressed properties, including foreclosed properties, coming to the market is the reason why there will be no home price rebound in 2012 and maybe into 2013, Guy Cecala of Inside Mortgage Finance told CNN.Money.

CNN.Money explains that distressed properties, including foreclosures, can also bring prices of homes that are not in trouble as mortgage appraisers assess a regular home’s value by comparing it to short sales and REOs in the area.

In a white paper entitled “The U.S. Housing Market: Current Conditions and Policy Considerations”, the Federal Reserve Board said that “the large inventory of foreclosed or surrendered properties is contributing to excess in the for-sale market, placing downward pressure on house prices and exacerbating the loss in aggregate housing wealth.”

The Federal Reserve Board identifies foreclosures, in addition to high unemployment and heightened uncertainty, as the reasons behind the extraordinary problems plaguing the U.S. housing market.

The board said that foreclosures go beyond personal suffering and dislocation. Foreclosures can result to deadweight losses or costs that do not benefit anyone such as the deterioration or neglect of properties that sit for months and even years and give negative effects to neighborhoods, the board said.

“These deadweight losses compound the losses that households and creditors already bear and can result in further downward pressure on house prices,” the board added.

Lender Processing Services, Inc., a leading provider of data and analytics to the mortgage and real estate industries, reports that as of November 2011, there were 6.26 million properties that were 30 or more days delinquent or in foreclosure. In addition, Lender added that 2.11 million more properties were in the process of foreclosure as of November 2011.

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