Foreclosure Bad Weather Continues as Home Sales Drop

May 8th, 2009 | Tags: Foreclosure Market

The foreclosure bad weather continues as home sales dropped in March 2009. The first time nest builders picked up nearly half of all the residential houses sold in March. Spring is the usual time for selling but this time the mood of sellers has been dull. The numbers sold have been less than February.

In March the sale of residential units dropped 3% calculating to 4.57 million in March. In February it was 4.71 million according to the National Association of Realtors. Agent Josh Roy of Keller Williams Realty in Wichita, Kansas said, “Thirty to 40 percent of the buyers out there are first-time home buyers. It is truly making up a large portion of our business.”

It is the same picture across the country with the bulk of the buyers being those who are purchasing a house for the first time. They are taking advantage of a new policy of tax credit ($8,000) that is included in the latest stimulus package. It is hoped that by early summer sales will pick up and clear the backlog of unsold houses.

The sharp decreases of prices together with the tax credit are prompting many to buy their own units. Jorge Martinez, a 30 year old truck driver had been looking around for a bargain in Miami. He and his wife said that they want to make the investment while the market is low.

The average value of houses plunged by 12% to touch $175,200. But it was higher than the average of February - $168,200. Usually prices increase in spring but the 4% rise was unexpected.

Not only are prices low but the mortgage interest rates are also low. This week the rate of interest for a 30 year fixed rate mortgage was 4.8% said Freddie Mac. There are some conditions – the buyers have to be credit worthy and be ready to make a down payment in cash. Above all they must have plenty of patience. Each loan is thoroughly combed and scrutinized. Tom McKinnon of Re/Max Realty 2000 of Fargo said they have never handled so much paperwork ever before.

The market is being dominated by foreclosures and short sales largely because of continued unemployment. Things are worst in California, Florida, Nevada as well as Arizona. Slowly the backlog is being cleared and some are beginning to be optimistic that the market is on a recovery mood. In San Francisco sales increased by 29% in March as compared to the same month in the previous year. Most of these were from the distressed category.