5 Reasons Why Home Prices May Have Hit Bottom
Over the past three years across the country, we have witnessed historic drops in housing market. Property values in Florida, Michigan, Arizona, and California have plummeted. Foreclosures and mortgage delinquencies have skyrocketed while interest rates are now at all time lows. Many analysts believe the home prices have bottomed out and great deals are there for the taking.
Despite some critics, a growing number of market watchers see signs the price decline has ended. Here are a couple examples and market areas where rebounds are currently taking place.
- Sarasota, Florida. Florida is one of the top States to be hit by the mortgage bust, Yet, indicators show the number of for-sale properties continues to push towards a healthy level. In markets such as Sarasota, Florida there was a 10.6-month inventory last month now down from 11.5 months in January. Generally, 6-months is considered equilibrium between buyers and sellers.
- Home Values Under 200,000. Looking at the lower end of the market, homes priced at $200,000 or less have stabilized. Thanks to decent investor demand, it’s not uncommon to see bidding wars for homes at this price level. Annual, median prices for low end homes in some parts of Florida has risen no higher than $110,000 and fallen no lower than $99,000.
- High Activity at Auctions. Many real estate brokers that spend their days checking out properties for sale through courthouse auctions finding there is considerably more competition among bidders these days. This similar activity is affecting the short sale market, made up of sellers that owe more to banks than their properties are now worth. Now banks are countering with higher offers and buyers are accepting because the prices are swinging in the opposite direction.
- New Federal Rules. Other market watchers say a new wave of foreclosures may be avoided because of new federal rules governing short sales and the expansion of the Obama administration’s mortgage-aid plan.
New Federal rules have forced banks to respond to short sale offers within 10 days. They don’t have to accept, but must provide a number they would be willing to accept, and that might speed short sales and eliminate some foreclosures.
Foreclosures are Cheap. Currently, Real estate bank foreclosures typically sell for 20% less than short sales, therefore overall prices could trend higher or accelerate the pace for home buying.
All though we are still in the early stages of recovery, positive data is starting to be reported around the country. There’s no debating sales for luxury homes have fell by 30% in many regions and jumbo rates still are reseting, though many realtors suggest these prices are being set to high. Today, banks are being forced to now dump these properties for huge discounts.
The big question remains whether there is enough demand for median and high-end properties at these greatly reduced prices.
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