Foreclosures Tempting Buyers

August 27th, 2008 | Tags: Foreclosures

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.