subject: Foreclosures Continue to Be Common in USA [print this page] The US is in the grip of a recessionThe US is in the grip of a recession. Unemployment is at its peak. As people lose jobs thick and fast, even those with very good credit scores, are faltering on mortgage payments. Hence, foreclosures are common.
In August, home prices declined further. Experts are not very sure if this meant a further decline in home values. Pat Paulson, of Minneapolis Area Association of Realtors, observes prices are really flat. In July, median prices of homes had increased. But the increase in the number of foreclosures offset the good effect.
Moreover, there is no tax incentive now. The tax credit that the Federal government had extended to first time buyers had enticed the first time buyers. The median home prices in the 13 counties of the region plummeted by 1.6 %. It was pegged at $172,165 in August. In the corresponding period in '09, the price was $175,000. The same data was released by the St. Paul Area Association of Realtors.
However, sale price of non-foreclosed homes was 9.2 % higher at $227,000. Also short sale price went higher to $145,000. A short sale happens when the seller pays less than what he owes in the market. In fact, this has become a common feature in the US market.
Home sales also declined by 34 % to 3,007 in July. Even demand for new homes saw a sharp decline primarily because the buyer has no incentives now. The government has withdrawn the Federal Tax credit on first-time home purchase. Subsequently, the stock of homes in the market has grown to abnormal proportions. The inventory has grown to 27,638 listings. This is an increase of 8.8 % in the corresponding period of the same year.
Experts say that the situation will remain bad till the employment scenario improves. Most Americans are without jobs and even those who have jobs, they have suffered pay cuts. Many Americans are afraid of spending money. And that is not doing any good to the economy.
Still experts like Paulson are extremely optimistic. He said, "The level of sales (is) certainly less than what we'd like to see, but on the other hand, it appears we've kind of hit a bottom. We've been selling 600-some homes per week, and it's pretty much been at this level since the end of the tax credit." However, it remains to be seen when there is a turnaround.
