Foreclosures are driving sales: study confirms housing market is far from healthy
Home values are declining and foreclosure rates are up 81% in 2008. Putting the two together leads to the following conclusion: investors are buying up foreclosed properties, driving down the price. According to Zillow.com, this is true, and worse yet, that conditions are worsening.
- 34.6% of 2008 national home sales were at a loss.
- 19.9% of the homes sold were foreclosures.
- The New York/Northern New Jersey had the lowest % of foreclosure sales, 3.9%, while Madera, CA marked the highest, 54.6%.
- 10.9% of the homes sold were short, i.e., sales price was lower than the seller’s mortgage obligation.
- The Albany, New York area had the lowest % of short sales, 0.1%, while Loncoln, NE marked the highest, 14.1%.
- 17.6% of all homeowners hold negative equity, or the value of the home is less than homeowners’ mortgage.
- This is a wide distribution: Anderson, SC had the lowest % of negative equity homes, 0.9%, while Las Vegas, NV marked the highest, 61.4%. That is a humbling statistic.
Some associated charts: The percentages of sales that are foreclosures and sold at a loss are rising.
Equity is back in the green for sales in 2007 (barely) and 2008, but the average buyer who purchased in 2006 is underwater, i.e., they owe more than the home is worth. That is a troubling statistic.
This report confirms that the housing market is crushed. It highlights that the stress signals – short sales, foreclosures, negative equity – are rising into 2009. The implication is that prices will continue to decline, but worse yet, the economy recovery will be pushed off until this market works out the excess supply of homeowners.
Originally published at the News N Economics blog and reproduced here with the author’s permission.