Repossession Homes Sales Drop Despite Low Prices
Data released by the National Association of Realtors showed that of sales repossession homes in April dropped to a significant level despite increase interest of investors and first time homebuyers on foreclosure properties listings.
The decline in sales of previously owned houses in the South was significant following an 8 percent yearly slide in March. The home sales decline also showed that low interest rates and the Obama Administration’s economic recovery plan failed to overcome the impact of massive layoffs and other economic concerns.
According to the association, the low-priced foreclosure properties have put pressure on home prices in the South. The median home price in the region dropped by nearly 13 percent to $148,000.
Nationwide, year-over-year existing home sales in April dropped by 46 percent, without any seasonally adjusting factor. Meanwhile, median home price declined over 15 percent to about $170,200.
National Association of Realtors group chief economist Lawrence Yun said that majority of purchases were made on low-priced houses, which are the entry-point for most first time homebuyers. According to data, novice homebuyers accounted for 40 percent of the buyers in the national market. Most first time homebuyers were enticed by low interest rates and a tax credit of $8,000 that is scheduled to expire on November 30 of this year.
However, Yun noted that sales of high-end properties remain slow because potential homebuyers are having difficulty getting financing. Furthermore, the price of existing homes for sale on the market increased by nearly 9 percent from last March. The increase represented a 10-month home supply at the current slow sales pace.
On the other hand, home sales in April rose from 2008 in only 4 out of the 20 Southern metropolitan areas. These areas are Washington, D.C. and Miami, Tampa and Orlando which are all in Florida. Data showed that these four cities showed an increase in home sale deals for three consecutive months.
Meanwhile, the Associated Press-Re/Max Housing Report showed that only the cities of Tulsa, Oklahoma and Little Rock, Arkansas reported an increase in median home prices.
Throughout the Southern region, low home prices benefitted homebuyers and provided an opportunity for sellers to change their strategy. In Florida, investors have started grabbing low-priced repossession homes with the plan of renting them.
The investor activity boosts April sales of repossession homes in Miami by 56 percent compared with the same month a year ago figures.
