Housing Problems Get Worse as Foreclosures Soar

Posted on May 14th, 2008 by saman

There is bad news for home sellers. The eroding of home values is accelerating and the filings of foreclosures have doubled.

A report has stated that in twenty cities, home prices have fallen about thirteen percent. The report also says that foreclosure filings hit an all time high between January and March. The report came out the day after the United Stated government has stated that the number of empty home have also hit a high.

Each month, the numbers are getting worse. February was the sixth month in a row that the twenty cities have had declines.

The city of Charlotte, North Carolina was the only city that posted a gain of one percent. However, Charlotte’s positive gain continues to decline each month.

These facts also mean that a home buyer with good credit has many housing options. In Las Vegas, half of the home sales are foreclosures. A real estate agent in Las Vegas says though there are still too many homes on the market, transactions are picking up.

During the first quarter of the year, the state of Nevada posted the worst foreclosure rate in the country. One in every fifty households has gotten a foreclosure notice.

Across the nation, one in every one hundred and ninety four homes has received a foreclosure notice during the first quarter o this year. This is more than double of the amount from 2007. This first quarter marked the seventh quarter in a row with increasing foreclosure activity.

Normally, the foreclosure problem would be solved when people started buying homes again. This however, would only happen in a normal market. Nowadays, people who do not have the best credit and cannot put down a hefty down payment have difficulty getting loans and this is making the recovery of the market slow.

Decreasing home prices and increasing mortgage payments are causing an increase in the number of foreclosures and loan defaults. This is having a serious affect on lenders who are now paying for the poor lending practices they took part in during the boom in housing a number of years back.

The financial company, Countrywide stated that is has lost about eight hundred and ninety three million dollars in the beginning of this year. This is after setting aside a substantial amount of money to cover losses that they took on home loans that were unpaid. In January, Countrywide agreed to sell itself to the Bank of America for about four billion dollars in stock options.

The housing problem in the nation along with rising food and gas prices are making the average consumer pessimistic. Consumer sentiment has dropped to the lowest point it has been at in the past five years. This means that things do not look good for a turnaround in the housing industry.

A research economist at a University in Texas has said that if the market starts in a certain direction, it will be carried downward. It will continue spiraling downward until something occurs that will change consumer psychology as a whole.