Home > Avid Law Center, Foreclosure > Foreclosure still taking toll on home prices

Foreclosure still taking toll on home prices

CNNMoney.com is reporting that 46% of homes sold in November were either short sales or repossessed homes, also known as REOs, according to a survey by Campbell/Inside Mortgage Finance.

As distressed homes sell for a lot less than homes sold by conventional sellers, the staggering numbers of short sales and REOs continues to take its toll on the average regular home sale. For example, the average price for a short sale was $209,000 in November and for a regular sale, the average was about $259,000.

With no end in sight on the current foreclosure crisis – more than 6 million borrowers are delinquent 30 or more days, according to LPS Applied Analytics and two million are already in the foreclosure process, most of which will be repossessed or sold as short sales – experts aren’t anticipating any changes in the next couple years on home prices.

Another factor dragging down home prices is the fact that when these distressed homes are being sold at such low prices, mortgage appraisers assessing a regular home’s value typically compare it to short sales and REOs in the area.

Additionally, home values are likely to shed $681 billion in 2012, according to Zillow, a slight improvement from last year.

From MSNBC’s Bottomline:

[T]he unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market, pushing our expectation for a potential recovery into late 2012 or early 2013,” Stan Humphries, chief economist at real estate research company Zillow Inc., said in a statement.

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