Foreclosures to Be Thanked For Regeneration of Market Forces

October 29th, 2008 | Tags: Foreclosures

It is the story of the eternal cycle that rotting vegetation leads to the rejuvenation of the forest and that devastating floods leave behind fertile soil for a plentiful morrow. In the same way it may be argued that foreclosures can be thanked for regeneration of the market forces again.

Sale of houses is rising in Prince William County – one of the worst hit foreclosure pockets. For this upswing foreclosures can be thanked. The same trend is noticeable in many counties of South California. The sale figures are up by two thirds from what it was twelve months ago. This is the largest jump in sale figures in the last two decades. In Prince William County over 1,100 houses were sold in the previous month. This was the highest number of September according to Northern Virginia Association of Realtors.

In the wake of the housing bubble this is a classic case of the market curing itself.

Meanwhile the government at all levels is trying desperately to contain the foreclosure crisis. It is difficult, as most of the families can no longer afford the high rate of interest levied after falsely raising the value of property. While the politicians huddle together and argue, the market is going about its own job. Defaults and foreclosures went wild and took over the entire housing section. This led to a fall out on the general economy.

It is erroneous to assume that continuous waves of foreclosures are going to bring down the prices further. The jump in sales indicates that prices have reached its lowest point. Multiple offers on a single foreclosed unit are being made. Buyers are now offering more than the minimum price being asked for.

In the beginning of this decade there had been tremendous activity in the housing sector. The prices of houses soared as the capital of America attracted 80,000 new settlers within a time span of six years. Many of the new houses were sold to owners who could ill afford them. This led to a chain of foreclosures. House prices began to fall. The average house price nose-dived from $405,000 to $239,000 in September within one year. This fall is now making houses more affordable again. Investors are thinking on lines of renting them out as right now foreclosure evictions have led to a high demand for rented accommodation.