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Listings of Repo Homes to Grow as Default Rates Rose

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By : John Cutts    99 or more times read
Listings of repo homes are expected to grow in many areas of the country because of the rise in default rates in October, based on data from research firm LPS Applied Analytics.

The LPS report showed that about 6.9 million families or around 12.4 percent of U.S. homeowners with mortgage loans were in default by at least one month or already in foreclosure in October. The percentage marked an increase from 12.3 percent in September and from 8.6 percent in October last year.

Additionally, homeowners with mortgage loans who are already delinquent by at least three months but have not yet received notices for foreclosure sales increased to about 3.4 percent of all U.S. homeowners or around 1.9 million households, marking an increase from 1.5 percent in October last year, based on the report from LPS.

Early in September, Amherst Securities Group estimated that seven million more homes will be foreclosed in the coming years. In his most recent speech, Federal Reserve Chairman Ben Bernanke also cited the continued growth of listings of repo homes, but he insisted that increased investments in the housing sector will contribute to economic growth in the coming years.

The slide in housing starts in October also dampened earlier hopes of recovery. Based on data from the U.S. Commerce Department, starts for new homes dropped by 10.6 percent from housing starts in September to its lowest level in 8 months. Starts for new single-family houses dropped by 6.8 percent.

However, the recent expansion and extension of the federal tax credit has renewed hopes that sales of newly-built homes will continue to improve, especially now that move-up buyers can also take advantage of tax credits.

Low mortgage levels are also expected to drive sales of all types of residential properties, according to realtors and housing analysts. Rates for fixed-rate 30-year home loans are still below 5 percent for borrowers with good credit scores.

Home affordability is also viewed as a major factor in housing market recovery. Although foreclosures pushed down home prices to low levels, they improved home affordability levels in many markets, enabling more families to realize their dreams of home ownership.

Average home prices almost doubled between the years 2000 and 2006, but since the start of the housing meltdown, home prices fell by around 30 percent. In many areas of the U.S., listings of repo homes are still pushing down house prices to levels lower than 2008 levels.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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