Cheap Foreclosed Houses Pushing Up Sales

November 10th, 2008

Cheap Repo Houses

It is good news for the real estate market – cheap repo houses that are being offered at heavy discounts, are pushing up sales. But economists say that the impact of the huge stockpile of foreclosed houses will continue to depress prices and the market for another year.

A Wall Street journal made a survey of 28 important metro regions. It showed that the glut of unsold houses that had been on the lists are slowly but surely shrinking. This is largely because of investors who are pocketing bargains hoping to let these out as rentals. Big drops in sale signs have been noted in Sacramento, Orange County and the suburbs of Virginia.

But certain reports are giving a mixed scenario. In the previous week the Census Bureau reported that the increase in sale of houses in September is a seasonal feature. It was a fall of 33% from what it was in September 2007.The average price of a new house in September was tagged at $218,400 showing a decline by 9% from the previous year.

The National Association of Realtors reported that sales of old houses increased by 1.4% from what it was twelve months ago. This is the first increase since November 2005 reflecting on the impact of the foreclosure crisis on the real estate market.

Housing experts strike a note of pessimism by saying that those houses that are currently on the lists will hit the market within a year or two causing further havoc. These including pending foreclosed houses and those units that have been taken off for the time being because of ongoing talks between the borrowers and the lenders. The chopping down of house prices by the banks has resulted in many taking off their house from the market so as to wait for better days, commented Michael Lyon of Trendgraphix Inc. of Sacramento.

Against this background credit continues to remain tight as the confidence of consumers continue to crumble. Unemployment is adding to the mess and causing many potential buyers to exit from the market. Others are being pushed into foreclosure. Kenneth Rosen of University of California, Berkeley said, “Now we’re adding a second leg down (in housing) which is the job losses.”

But despite the cloudy foreclosed weather life goes on and there are many who believe that this is the right time to pick up bargains.