It is a buyer’s market as foreclosures are tempting buyers to dip into their pockets and invest in property. There are bargains galore. Many are finding the offers hard to resist.
Recently the National Association of Realtors stated that the sale of existing houses increased by 3.1% in July as more and more buyers came forward to take advantage of the offers of heavily discounted properties. This tendency is most prominent in those parts of the country where foreclosures have been the most intense and staggering under the blow of the housing collapse.
On the one hand there is no doubt that with foreclosed units flooding the market, prices are falling with supply out pacing demand by leaps and bounds. But on the other hand the bargains are attracting buyers and expediting sales. Thus in a way foreclosed units are speeding up the sale of houses. This in turn gives rise to the hope that the market will make a turn around and find its level.
According to NAR the sales, which were expected to climb by 1.6%, increased to a seasonal adjusted rate counting to 5.0 million unites. The average price of a house fell by 7.1% from what it was a year ago. The number of houses that were sold in a month was lower by 13.2% from what it was a year ago. This increased the number of houses waiting to be sold by 100,000 in July 2008. On an average this calculates to a supply of 11.2 months as per the findings of TradeTheNews.com.
While the price of houses decline on one side, on the other more house owners are slipping into default being unable to meet mortgage expenses. As foreclosures surge the housing prices fall further. The government, in this election year, is struggling hard to stabilize the position by increasing the powers of the Federal Housing Agency. FHA insures mortgages. The mortgage rates are also being lowered by keeping the government backed jumbo lenders Fannie Mae and Freddie Mac running and fit.
Some calculate that those regions that have suffered the worst battering at the hands of foreclosure, like southern California will recover the fastest. Here the price has gone down by a third and thereby attracting bulk purchasers. At never before prices buyers can move into exclusive enclaves – and many are doing so. With demand for rented accommodation on the rise, at this point investing in foreclosed houses seems to be a safe bet.
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At a recent election forum the residents of Cactus Districts were quizzing candidates about foreclosures, taxes and funds for the city. They wanted to know what steps would be taken to improve the health of the neighbourhoods reeling under foreclosure related decline.
About a dozen queries were about the blight caused by vacant foreclosure houses in residential as well as commercial regions of southeast Glendale. There were about 50 residents. Darlene Saracio was one among many who was dissatisfied with the answers. She categorically stated that she wanted “solid solutions”.
Phil Lieberman was seeking a fifth term as the councilman of the district. He said that he regularly contacted the code department of the city. His observations are that in other parts of the city the problem was three fold worse. He added that the city authorities were aware of the worsening situation in Glendale Avenue. As such the council had taken up the job of revitalizing the namesake street of the city the top priority. Operations had taken off this spring with the building of a city courthouse at Glendale and 47th avenues.
Gary Hirsch who was challenging Lieberman lauded the Glendale Avenue project but given a chance he wanted to extend it to southern parts of Camelback Road. Here the vacant or about to be vacant properties could be improved upon to interest business firms. A wider tax base and new jobs could give a fillip to the area. He argued that the city government could not be held responsible for foreclosures although the negative impact was undeniable. Hirsch suggests partnering with banks and realtors to find a way out of the foreclosure related problems.
Some of the queries were candidate specific and related to particular districts. Others were directed at all including Councilwoman Joyce Clark and Carole Marx who were in the fray for seats in Yucca District of west Glendale.
Mayoral candidate Terry Pennington did not give any reply to questions after introducing himself. Mayor Elaine Scruggs is seeking re-election. She was unable to be present because of attending an executive committee meeting of the League of Arizona Cities & Towns.
Although questions were raised about food tax and illegal immigrants the problem uppermost on the minds of most was the foreclosure problem. It was creating havoc with empty units attracting crime and disease while pulling down the real estate market.
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When an epidemic advances it makes no distinction. It is the same with the latest housing crisis that is making no differences between lenders and borrowers, governments and communities – all are suffering. Foreclosures are not sparing even the prosecutor of Wayne County.
Kym Worthy is the prosecutor of Wayne County. She has a house in northwest Detroit. It has gone into foreclosure and she is about to sell it to the mortgage company. Recently Wayne made a statement regarding this foreclosure. She said that the transaction was in the nature of a short sale. She was waiting for the green signal from the lenders to proceed with it. Talks are on with Countrywide Financial for the finalization of the short sale.
The foreclosure is a judicial process by which the lender seeks the permission of the court to seize the mortgaged property and realize unpaid dues. But in the mood of the present market it is difficult, if not impossible to sell. Moreover the foreclosure is a costly process that takes up a lot of time. So the lender usually agrees to a short sale in which the sale price is often less than the loan amount. The bank waives aside the balance and is happy to get what it can.
Worthy said, “A short sale for my home is pending acceptance by Countrywide, and there is an offer to purchase the property.” She further added that talks are still on with the officials of Countrywide. The officials of Countrywide were not available for comments.
According to Wayne County treasury reports Worthy has also fallen behind in paying property tax on her house to the tune of $7,600. In 2004 she had bought the house for $337,500 as per Registry Deed records.
From this April of 2008 her financial troubles had started. Anonymous automated calls came over the telephone alleging that she had pocketed $128,000 a year and yet owed thousands of dollars in taxes. Moreover her child went to an exclusive private school. Her current salary is higher than what is alleged – it being $154,521.
Worthy admitted that she did owe the fed tax money and there was a lien on her property. The liability arose when cashed in an IRA in 2003 to fund her efforts to get the post of prosecutor. But she was current in her payments. During 2006 and 2007 she owed on her rental property. She terms the whole episode as a campaign to malign her name.
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Foreclosures are thumping down real estate values by 29.3% thanks to the banks off loading thousands of houses it had foreclosed upon in a panic mood. Handling so many units is beyond their capabilities, apart from the fact that the local communities, politicians and government at all levels are critical about the vacant houses.
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A new line of strategy has been drawn up to handle the crisis of foreclosures. When the lenders of Indiana refused to comply with the state law defending the foreclosure victims, the plan to reduce the rate of foreclosures was declared.
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All the data points to the fact that the foreclosure crisis will worsen before it improves. The North County real estate market has been flooded with foreclosed units and all the indications are that this tendency will continue through the current year, 2008.
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Foreclosures respect nothing – neither name nor fame nor patriotism. This is leading to army personnel clashing with lenders over foreclosures. James Hurley is one of the many battling an enemy named foreclosure they cannot see in front.
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Billionaire businesses giant Donald Trump is ready to help television personality Ed McMohan avoid foreclosure of his multi million-dollar house on Beverly Hills. A spokesperson for McMohan, Howard Bragman said that the discussions are going on but the deal has not been clinched as yet. However there is a lot of optimism that foreclosure will be avoided.
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In comparison to July 2007, this year bank repossessions reached record heights in USA. Foreclosures rose by 55% during the same time according to reports released by RealtyTrac. Over 272,000 units calculating to 1:464 went into foreclosure. By foreclosure is meant any of the three stages – default and auction notice as well as bank repossessions.
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According to realtors, in Minneapolis foreclosure suffering is increasing. The foreclosures number and bank repossessions in the region of the Twin Cities doubled from what it was in the previous year. The traditional listings have fallen by 16% in the second quarter according to Minneapolis Area Association of Realtors.
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