U.S real estate values dropping as foreclosures continue to mount
Housing market helped by low mortgage rates but hurt by high inventory
SACRAMENTO, CA – April 16, 2008 - According to a widely watched indicator of the health of America’s residential real estate market, the Standard & Poor’s Case-Shiller National Home Price Index, homes for sale in the United States fell more than 10% in value from June 30, 2006 to December 31, 2007.
Federal attempts to jump start the housing market
The Federal Reserve and Congress are attempting to jump start the housing market with low interest rates and legislative rescue proposals, but many market watchers say that time will be the only real cure. The Federal Government is attempting to increase the size of the loans that Freddie Mac and Fannie Mae may purchase from mortgage issuers in order to allow these lenders a way to free up capital and re-lend it to other prospective home buyers.
According to Freddie Mac the average rate for a 30 year home mortgage loan is 5.88%. A year ago the figure was 6.22%. Despite these attempts to help the housing sector there are reportedly 4.5 million homes for sale in the US in March of 2008. This large inventory of homes for sale has roots in the large numbers of foreclosure houses that are owned by banks as real estate owned (REO).
Focus on California real estate
In California alone, according to RealtyTrac (see http://www.RealtyTrac.com), the number of homes in some stage of foreclosure proceedings increased more than 20% in March. This figure represents approximately 65,000 houses or 1 in each 200 homes.
Another company that counsels homeowners facing foreclosure, TheHomeBuyingCenter.com (see http://www.TheHomeBuyingCenter.com), reported that they are receiving hundreds of requests for assistance every week from homeowners who are looking for a way to sell their house quickly. Company president Patrick McGilvray said, “we help homeowners and home buyers nationwide who want to buy or sell a home by providing them with access to real estate investors eager to buy houses in their area as well as a complete range of real estate services such as agent referrals, foreclosure homes for buyers, and corporate relocation services.”
McGilvray commented that the central valley cities of California such as Stockton, Modesto, and Sacramento are still reeling under the strain of falling home prices. He said that this is the result of unrealistic house prices that went to ‘absurd’ levels primarily because of the easy availability of adjustable rate mortgages and generally unrealistic housing prices that were not supported by people’s incomes. “There is, unfortunately, more pain ahead for American homeowners, but we’re a strong country and will get through it.”