William Lucy, a professor, and Jeff Herlitz, a graduate student of the University of Virginia have both analyzed the foreclosure market in 35 metropolitan areas, 236 counties and 50 states.
Their analysis showed that foreclosure homes and cheap houses for sale are concentrated only in four states, namely Arizona, California, Florida and Nevada and some metropolitan counties located in other states.
The results indicated that foreclosures and cheap houses for sale are not national problems as previously believed. According to both researchers, California accounted for only ten percent of the nationwide share of housing units but its foreclosures and cheap houses for sale amounted to 34 percent in 2008.
They explained that California’s vulnerability to foreclosures and abundance of cheap houses for sale are due to the high median value of houses in 2007 which was 8.3 percent greater than the average family income.
The national median price value in 2007 was 3.2 percent higher than the average family income, a significant increase from the 2.4 percent in 2000.
Furthermore, the study predicted that about 66 percent of the potential foreclosures and cheap houses for sale in 2008 and coming years will be found in California, with Arizona, Florida and Nevada sharing the 21 percent of the total 87 percent national home price declines.
Both researchers also noted the vulnerability to foreclosures of homeowners living in the metropolitan area of Los Angeles, where over 20 percent of families took out about 50 percent from their income to pay for housing-related costs.
Meanwhile, the increase in the number of foreclosure properties and the subsequent decline in prices of houses from 2000 to 2006 led to a 10-month supply of cheap houses for sale.
However, both researchers clarified that majority of the housing supply excess are either foreclosed homes in areas greatly affected by the foreclosure crisis or properties put on the market by homeowners who want to profit on the price increase trend of previous years. They added that only a small part of the housing supply excess is from newly constructed houses.
Both researchers estimated that potential value losses in the housing market from foreclosures in 2008 in 50 states accounted for not more than 33 percent of the nearly $350 billion given to insurance companies and banks to help them cope with losses they incurred in their mortgage-backed securities.
Author Resource:-
John Cutts has been educated in the finer points of the foreclosures market over 5 years. Read foreclosure listings articles at ForeclosureListingsNationwide.com - Your online source for foreclosure listings.
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