4th Quarter Home Prices Down as Buyers Purchase Distressed Property

In the fourth quarter, 134 out of 153 metropolitan statistical areas showed declines in median existing single-family home prices from the same period in 2007, pulled down by active sales at the lower end that were driven by foreclosures.

Distressed sales - foreclosures and short sales - accounted for 45 percent of transactions in the fourth quarter, dragging down the national median existing single-family price to $180,100, which is 12.4 percent below the fourth quarter of 2007 when conditions were more balanced; the median is where half sold for more and half sold for less.

"It has never been more important than now to work with local professionals to properly gauge local neighborhood conditions because foreclosures are heavily skewing the broader home price figures to be much lower. Big discounts are not occurring in neighborhoods with few foreclosures. A Realtor^®who is knowledgeable about local conditions can counsel consumers in making sound long-term housing decisions," McMillan, the NAR president said.

Lawrence Yun, NAR chief economist, said the market is clearly depressed from job losses and consumer concerns about the economy. "Assuming housing provisions in the economic stimulus package are quickly enacted and provide enough encouragement for home buyers, we could see a quick lift in home sales for the critical spring home-buying season," he said.

"If that occurs, we could see home prices begin to stabilize in many metro areas later this year as supply and demand begin to return to balance, which would greatly benefit the overall economy," Yun said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to 5.86 percent in the fourth quarter from 6.32 percent in the third quarter; the rate was 6.23 percent in the fourth quarter of 2007.

The largest sales gain in the fourth quarter from a year earlier was in Nevada, up almost 134 per cent.

In California, we followed Nevada, to be in SECOND place which rose 84.7 percent; Arizona came in third, up 42.6 percent, and Florida with a 12.5 percent increase was in fourth place for number of sales increase.

"Once again, we see a pattern of strong sales gains, particularly in lower price homes, in areas with price declines resulting from foreclosures," Yun said. "For example, in California and Florida, where distressed sales accounted for roughly two-third of all sales, the median price fell by much more as lower priced home sales far outpaced higher priced sales."

Of course, all of this is bringing in MANY buyers to the home buying mode... thus, we are seeing so many properties with multiple offers.

According to my calculations, foreclosure homes in Southern California, mainly the San Diego areas, Chula Vista and South Bay homes and condos, are selling for around 7% over the asking price... depending of course, on time on the market, comparables, condition of property, and other circumstances.

Thus, Buyers need to be ready to offer that five or seven percent more over the heavily discounted prices!

Definitely still a bargain!

Gustavo Torres

www.CaliforniaForeclosuretour.com

cell 619-632-7045