Nationwide, the housing market has lost about 12 percent of its home values because of hundreds of thousands of houses in foreclosure listings. In places which rank high on lists of state foreclosures, such as Florida, California, Nevada and Arizona, home prices have declined to bottom levels.
Similarly, homes have lost much of their values in the manufacturing states, such as Michigan, Wisconsin, Ohio, Indiana and Pennsylvania, because of the collapse of the steel and automobile industries.
According to the U.S. Federal Housing Finance Agency’s home price index report released on March 24, home prices dropped by 6.3 percent for the 12 months ended January 2009. The national home price index fell to 9.6 percent below its peak level in April 2007.
Based on RealtyTrac’s foreclosure data, there were 2,330,483 residential properties which were included in foreclosure listings in 2008. Nevada and Florida posted the highest foreclosure rates while California and Florida had the most number of residential properties in foreclosure listings. Arizona was third in both foreclosure rates and foreclosure totals.
With the continuous addition of homes to foreclosure listings and continued decline of home prices, the Obama administration’s foreclosure prevention program has not yet shown its impact on the housing market. Some analysts are giving the foreclosure prevention program about two months to show its effect, as many mortgage lenders have not yet put their loan modification and loan refinancing procedures in place. They also need to train their staff on how to handle various mortgage cases.
Even so, there are areas which did not suffer so much in home price declines, such as Georgia. Based on the Federal Housing Enterprise Oversight’s data, the average home price decline in metropolitan Atlanta is only 3.82 percent. The price decline was relatively low despite Georgia’s top ranking in RealtyTrac’s list of states with the most homes in foreclosure listings.
Housing analysts are not certain if home prices have bottomed out. Many real estate investors and potential home buyers are still waiting for prices to decline further. Perhaps they are still seeing lots of residential properties being added to foreclosure listings.
Some housing experts say that the keys to the recovery of the housing sector are the reduction of foreclosures and the reduction of banks’ foreclosure listings. They recommend higher federal tax credits for buyers of properties from foreclosure listings in foreclosure-laden areas and inclusion of investors in the tax credit incentives. They say limiting the tax incentives to owner occupants would make only a small dent on foreclosure listings.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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