Foreclosures Are A Blessing For Some
May 22nd, 2008
Foreclosures are turning into a blessing for some – especially young families building their first nest. The sharp fall in prices is making their dreams become a reality.
This is the case for Matthew and Zoila Toth who bought a foreclosed house In the Country Club region of Stockton. They could move in with their little boy into a house worth $132,000 carrying a mortgage of $950 per month. Previously they lived in an apartment with a monthly commitment of $1,100. They had some money left over for doing up the unit. It was a great bargain. To them the foreclosure has been a blessing.
Other young families who are now able to afford houses now that the prices have gone down thanks to the foreclosure crisis will soon follow the Toths. According to a report released by California Building Industry Association the affordability of units in San Joaquin County has doubled during the period stretching from October 2007 to March 2008. A family having an income of $61,300 can now reach out for 35.5% of the houses put for sale. Previously they could afford only 9.7% of the units during the first quarter of 2007. During the first quarter of this year the average price of houses sold was $262,000. A year previously it was $390,000. It was a sale price tumble of about one third.
The figures mean sales is picking up as confirmed by realtors and brokers. John Cowgill of PMZ Real Estate says that since the start of this year he has sold 50 houses. During the same time last year he had managed to sell only 8. Most of the buyers are first time nest builders who are coming in droves with affordable cash in their pockets and dreams in their hearts. The mortgage and insurance per month payment has fallen to less than the rents usually paid. According to National Association of Home Builders/Wells Fargo Housing Opportunity Index families can afford 28% of their gross income for housing. Of late the affordability has greatly increased due to the falling prices of houses.
Terry Hull, another property manager says that prices have gone down low enough for investors to snap up bargains and set up rental units for investment purposes. This covers the mortgage and leaves something over. But most of these houses were concentrated in areas of high foreclosure. In major metro regions the affordability remains below 25%.
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