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Log inSales of foreclosed homes are up nationwide
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Sales of foreclosed homes are up nationwide
by Outspoken on Sun Jul 27, 2008 7:11 pm
Sales of foreclosed homes are up nationwide
By Prashant Gopal
BusinessWeek Online
It used to be that buying a foreclosed home was considered risky for all but the most seasoned investors. Most casual buyers didn't know how or where to find such houses, were nervous about the condition of the properties, and generally felt uncomfortable with the notion of benefiting from someone else's misfortune. But, just as buying on credit was once anathema to many Americans, the longtime thinking about foreclosures now seems increasingly antiquated. Today, in many parts of the country, it's difficult to find a listing that isn't either owned by a bank or just a couple of missed payments away from foreclosure.
That's especially true in California. In the second quarter of 2008, seven in 10 existing-home sales in San Joaquin and Merced counties were of properties that had gone through foreclosure in the previous 12 months, according to DataQuick, a La Jolla (Calif.) real estate information company. In Sacramento County, six in 10 sales involved foreclosures.
It's no wonder that prices in these markets are tumbling: Distressed sales have a way of dragging prices down for entire communities. Aaron Smith, senior economist at Moody's Economy.com, says markets in which foreclosed homes dominate listings suffer from a kind of "negative feedback loop."
"Prices decline, so you have more foreclosures, and then more price declines," Smith said. "But it's better to have activity than not."
BusinessWeek.com, working with data from Moody's Economy.com, came up with a list of the 20 states where foreclosures, or other sorts of distressed sales, made up the largest share of existing-home sales. Unsurprisingly, California topped the list, with foreclosed houses and condos making up 41% of existing-home sales in the second quarter. That's up from 9% in the second quarter of last year. Nevada was next, at 40% (up from 11% a year ago). To people tracking foreclosures across the country, the litany of other hard-hit states such as Arizona, Florida, and Rhode Island are all too familiar. Even Michigan and Ohio -- Rust Belt states that didn't experience the same level of overbuilding, rapid home-price inflation, aggressive lending, and speculation during the boom -- hit the top 10, largely because of the loss of manufacturing jobs and other economic hardships.
http://news.yahoo.com/s/bw/20080725/bs_bw/jul2008bw20080723716396;_ylt=AnPqm_VQQvP4kAx_saY1XU.s0NUE
(AFP/Getty Images/File/Justin Sullivan)
By Prashant Gopal
BusinessWeek Online
It used to be that buying a foreclosed home was considered risky for all but the most seasoned investors. Most casual buyers didn't know how or where to find such houses, were nervous about the condition of the properties, and generally felt uncomfortable with the notion of benefiting from someone else's misfortune. But, just as buying on credit was once anathema to many Americans, the longtime thinking about foreclosures now seems increasingly antiquated. Today, in many parts of the country, it's difficult to find a listing that isn't either owned by a bank or just a couple of missed payments away from foreclosure.
That's especially true in California. In the second quarter of 2008, seven in 10 existing-home sales in San Joaquin and Merced counties were of properties that had gone through foreclosure in the previous 12 months, according to DataQuick, a La Jolla (Calif.) real estate information company. In Sacramento County, six in 10 sales involved foreclosures.
It's no wonder that prices in these markets are tumbling: Distressed sales have a way of dragging prices down for entire communities. Aaron Smith, senior economist at Moody's Economy.com, says markets in which foreclosed homes dominate listings suffer from a kind of "negative feedback loop."
"Prices decline, so you have more foreclosures, and then more price declines," Smith said. "But it's better to have activity than not."
BusinessWeek.com, working with data from Moody's Economy.com, came up with a list of the 20 states where foreclosures, or other sorts of distressed sales, made up the largest share of existing-home sales. Unsurprisingly, California topped the list, with foreclosed houses and condos making up 41% of existing-home sales in the second quarter. That's up from 9% in the second quarter of last year. Nevada was next, at 40% (up from 11% a year ago). To people tracking foreclosures across the country, the litany of other hard-hit states such as Arizona, Florida, and Rhode Island are all too familiar. Even Michigan and Ohio -- Rust Belt states that didn't experience the same level of overbuilding, rapid home-price inflation, aggressive lending, and speculation during the boom -- hit the top 10, largely because of the loss of manufacturing jobs and other economic hardships.
http://news.yahoo.com/s/bw/20080725/bs_bw/jul2008bw20080723716396;_ylt=AnPqm_VQQvP4kAx_saY1XU.s0NUE
(AFP/Getty Images/File/Justin Sullivan)
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