Largest Price Discounts on Foreclosed Homes
Prices of foreclosed homes for sale dipped further in the third quarter due to lower demand for such properties. The huge price markdowns were welcomed by buyers who intend to buy homes at much lower costs.
A Real Estate information firm has released findings of a quarterly survey, which indicate that foreclosed homes sold for around 32% lower in the third quarter ending September compared to sales of homes that were not foreclosed. Foreclosed homes were estimated to have comprised about one in every four residential houses in the quarter.
Analysts said the lower demand for foreclosures led to steep drop in prices. They asserted that such price markdowns were the biggest since the fourth quarter of 2005 when prices of foreclosed houses also fell significantly.
The same survey revealed that there were up to 189,000 households in the foreclosure procedures that were sold to third-party buyers in the third quarter. Those were 25% lower compared to the same categories of homes that were sold in the second quarter. Compared to the same period last year, the third-quarter drop was about 31% lower.
Market observers expect that demand for foreclosure homes might further weaken or drop. This is because of the impact of the foreclosure-processing controversy that is involving major mortgage lenders. Foreclosed properties are to be most affected by the controversy.
Federal regulators and state attorneys general have already launched their respective probes over the allegedly improper practices of major mortgage lenders. Those banks include JP Morgan Chase & Co, Ally Financial, Citigroup Inc, and Bank of America. The lenders are being looked at for their alleged ‘robo-signers’ and ‘dual tracks’ practices.
Meanwhile, analysts also attributed the decline in foreclosed homes sales to the effect of an expired tax credit offerings to consumers’ buying moods. The federal government launched a home buyer tax credit program last year to lure homebuyers into purchasing properties. The same tax breaks expired in April. Since then, home sales figures have been somehow affected.
For their outlook for the fourth quarter, analysts said they expect sales of foreclosed homes to further drop. This is due to the continuously skittish consumer sentiment regarding buying foreclosed properties. They added that many consumers are still hesitant about the foreclosure processes in banks. Thus, lower prices for foreclosures are still expected to come.
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