Home Prices Plunge to Never Before Lows as Foreclosures Rise

The real estate market in US has crashed with home values plunging to unheard of lows. Foreclosures are a common feature now. In fact, most areas are dotted with foreclosed properties.

This decline in home prices has come as good news for first time investors. But for sellers it is bad news. They are delaying home sales because of the same reason – pitiable real estate market.

According to a survey by Realtor.com, home prices have become so affordable that two-thirds of buyers are back into the market in search of bargain. About one in five (19.6 per cent) says that the decline in prices of foreclosed homes are propelling them towards buying homes. Above 15 per cent people say that they are motivated to buy now because prices will never be this low. Another 15.5 per cent say they want to buy homes before interest rates go up. For another 14.6 per cent people, the tax credit of $8,000 is the motivating factor to buy a home.

The survey has also found out that most people are not even aware of how affordable houses have become. A family earning $53,182 which is the national median income can afford 75 per cent of the current homes.

In the last one year, the Housing Affordability Index has improved by 29 per cent. For the first time buyer, the index has increased by 19 per cent. Realtor.com President, Errol Samuelson says that home values have reached such levels that they should motivate first time buyers. The quality and variety of homes that are within the reach of the American family is much bigger than what people realize. The real estate market can be restored by taking the following two steps, feel experts. First credit must be made available to responsible buyers. Second consumer confidence must be instilled.

Samuelson explains that although lower home prices are a motivating factor for buyers, sellers are refraining from sales simply because prices are very low. They are waiting for the period when prices will go up.

Another important finding is that distress sale and short sale that constitute nearly half of home sale are putting a reverse pressure on prices. Such homes are not very popular with home buyers. More than 60 per cent of the surveyed people said that they do not want to buy a foreclosed property.

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