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Three Factors Affirming Saint Louis Foreclosure Investing

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By : John Cutts    99 or more times read
There are at least three positive market developments for people involved in Saint Louis foreclosure investing: the spike in foreclosure activity, the continued surge in home prices and the low level of mortgage rates despite the Federal Reserve pullout.

In April, foreclosure filings in the Saint Louis metro area spiked by a sharp 21 percent over the year, with 1,090 homes posted for public auctions and 789 units already repossessed. The spike was caused in part by deliberate delays by banks in completing their filings as they waited for homeowners to work out loan modifications.

The other major cause was unemployment, which has been pushing more homes into default and foreclosure not only in Saint Louis but also in other U.S. cities. The jobless rate in Saint Louis in March was 10.9 percent, down by 0.1 percentage point from 11 percent in February, but still far above the national rate of 9.7 percent. It was also up from 9.8 percent in March 2009.

The increase in home prices in the first quarter in Saint Louis is also a positive development for Saint Louis foreclosure investing, as it shows the pace of market recovery in the area. The median sales price during the period was $116,100, a sharp jump of more than 15 percent from the $100,900 median one year earlier.

The first-quarter median however marked a decrease of 8.4 percent from the previous quarter when the price median was $126,800. Saint Louis nonetheless was one of only 91 metro areas that posted median increases year-over-year and one of only 29 that posted double-digit increases.

Statewide, the median house price in the first quarter was $100,800, an uptick of 4.6 percent compared to the same quarter last year when the median was $96,400. Similar to the city, Missouri also posted a median price decrease compared to the previous month, experiencing a nearly 18-percent drop from the $122,800 median in the final quarter of 2009.

With the price increases, hopes are raised that the market is becoming strong amid the continued increase in foreclosure activity. Statewide, foreclosure filings continued to increase in the first quarter.

A total of 9,080 homes were put into foreclosure during the quarter, with 3,852 units already in listings of foreclosed homes for sale. Total filings marked a 10-percent jump from the same quarter last year and a 24.5-percent spike from filings one year earlier. Of the nearly 3,900 REO units, it is expected that prospective buyers looking for cheap homes in Missouri will find their desired houses.

The REO total is also expected to increase as many of the 5,206 units posted for trustee sale during the quarter will not be rescued through loan modifications.

The still low mortgage rates offered to home loan applicants in the metro area will also help facilitate Saint Louis foreclosure investing. Despite the decision of the Fed to stop buying mortgage-backed securities, the rate for no-point fixed-rate 30-year mortgages is still hovering at the 4.875-percent level and the rate for the 15-year term is still in the 4.25- to 4.375-percent range.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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