Foreclosures: the New Market?

Feb. 9, 2009 - PRLog -- Whilst property prices may be spiralling downwards in the Golden state of California, sale levels are on the up, with mounting foreclosures beginning to energize bargain-hunting buyers…

Who would have thought that the words ‘property boom’ would be uttered at this point in time, when global housing markets are stuck in a no-through road?

Foreclosures and short sales – which are homes offered for sale at prices below their mortgage amounts – are now proving to be very influential in shaping markets.

In Southern California, the property market was indeed ‘booming’ at the end of last year, but in a very different way to previous booms, when prices were sky rocketing.

Whilst sales of properties in California rose 84.9 per cent last December compared with the same period in 2007, prices remained falling.

This rebound in terms of sales numbers is mainly due to the increasing attraction of snapping up a foreclosed home at a bargain price. Distressed sales across America’s West - including California, Nevada and Arizona, accounted for around 45 per cent of all sales last month.

Region wide, foreclosure resales accounted for 55.7 per cent of December’s resales activity, up from 54.7 per cent in November, and up from 24.3 per cent in December of 2007.

The Los Angeles based California Association of Realtors (C.A.R) said that, whilst they expect home prices throughout most of the state to decline this year, sales of existing homes will continue to rise.

Home prices plunged 29.3 per cent last month from a year earlier, to a median of £249,000 in six Southern California counties.

Without these bargain hunting buyers, homes would languish even longer on the market, leading to steeper price cuts.

C.A.R. President William E. Brown said, “We expect that the economy will be at its weakest period over the next three quarters through the second quarter of 2009, with recessionary economic conditions throughout that time period, before we begin to see a turnaround in the second half of next year.

“Going forward, a great deal depends on the state of the financial system in general and the real estate finance situation in particular, as well as the flow of distressed sales through the market.

“Expect sales of distressed properties in California to peak in early 2009 - a critical factor in the housing market that directly impacts the time frame for stabilization in the median price,” added Mr Brown.

A total of 19,926 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month.

That was up 50.5 per cent from 13,240 for December 2007, according to MDA DataQuick.

Price predictions

The C.A.R are suggesting that the median home price in California will decline six per cent to £251,122 in 2009 compared with a projected median of £267,255 this year, while sales for 2009 are projected to increase 12.5 per cent.

Mr Brown added, “Looking ahead, home prices and favourable interest rates in 2009 will contribute to gains in affordability.

“However, we need to move through the current financial crisis and restore the flow of credit so that qualified buyers are able to take advantage of improved afford ability and successfully purchase homes,” he added.

President Obama’s £578.7 billion stimulus plan aims to generate job growth, cut taxes and encourage spending on infrastructure. The new President is also planning to pump £70 billion of the remaining half of the £491 billion financial-rescue funds into trying to ease the mortgage-foreclosure crisis.

For more information on American properties and the market in general, please visit http://usa.themovevchannel.com/

-ENDS-

Notes to editors:

TheMoveChannel.com is a property website that was founded in 1999 as an online resource for buying, selling and learning about property. It now receives as many as 300,000 visits per month and advertises over 50,000 properties in nearly 90 countries, which are listed by over 500 partner organisations.

For further information as well as images and interview possibilities, please contact:

Dan Johnson
Managing Director
www.themovechannel.com
0207 952 7650

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TheMoveChannel.com is a property website that was founded in 1999 as an online resource for buying, selling and learning about property. It now receives as many as 300,000 visits per month and advertises over 50,000 properties in nearly 90 countries.