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Foreclosures and Freddie Mac Homes Keep Home Prices Down

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By : John Cutts    99 or more times read
Sales of housing units, including Freddie Mac homes, increased in some areas of Virginia during January 2011. However, median selling prices of homes declined due to the huge percentage of foreclosed and distressed properties that accounted for the total number of housing units sold.

Home auctions in Richmond and in other areas of the state sold more dwellings last month compared with the same 2010 month. In the Peninsula region, home sales increased by 30% in January 2011 compared with January 2010. However, the median price for houses sold declined by 3% over the same period. Last month, dwellings sold in the region had a median price of $183,250. Realtors reported that the price was the lowest median recorded since January 2006.

They also stated that the increased interest in Virginia foreclosure auctions and other home sales was due to the rise in interest rates. Brokers revealed that most buyers who were previously reluctant to make a purchase made up their minds last month, fearing that the interest rate will now start rising and they had better take advantage of the low rates while they can.

Economists in the region have warned that the surge in sales should not make the market over optimistic. They took note of the initial November 2009 deadline for the government tax credit program, which, they said, caused home purchases to be closed earlier than January 2010, thereby deflating figures for the first month of that year and inflating January 2011 sales figures. Moreover, they stated that prices are down mainly because majority of homes sold last month were distressed, like foreclosed Freddie Mac homes.

Short sales and properties from public home auctions for sale accounted for a large percentage of houses sold in January in various parts of Virginia, which bring most markets' median selling rates down. In the area of Hampton Roads, realtors reported that median selling rate last month was at $190,000, the lowest median recorded in that area since April 2004.

Realtors also reported that for the whole Peninsula region, distressed properties, including Freddie Mac homes, accounted for 39% of total home sales in January 2011. They added that the percentage is the highest recorded in the area since the start of the foreclosure crisis.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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