What in the world is going on with the real estate market in the United States? It appears that the American housing market slump hasn’t quite reached its bottom yet, and may continue to slide through spring 2008.
A recent article from Bloomberg.com reports that home foreclosures doubled in September to a record 223,538 filings. California and Florida were the states hit hardest by the recent upturn in foreclosures. Nationally the foreclosure rate is now one out of every 557 homes according to the California-based real estate monitoring firm, Realtytrak.
Some analysts are now concerned that the US real estate drop could begin to affect unemployment rates and other economy benchmarks. Currently there is an estimated 10 month’s worth of unsold properties in the United States — amounting to the highest level of unsold homes in more than eight years.
Homeowners hit the hardest are those with adjustable rate mortgages, or “ARMs,” many of whom are going into default on their mortgages as soon as the higher interest adjustments kick in. Amongst adjustable rate mortgage owners, the foreclosure rate is much higher than the national average, even approaching record foreclosure rates in many of the hardest hit areas.
But for those in the market for a new home, the news could not be better. Average home prices in some US major markets fell 3.9 percent over the past 12 months, the steepest slide on record, according to the Case- Shiller Home Price Index. Savvy buyers have been taking advantage of the high rate of foreclosures over the summer and into the fall. Nevada has been hit particularly hard, resulting in bargain deals for so-called “house flippers.”
And in California, where the foreclosure rate is as high as one out of every 248 homes, average property prices are dropping monthly. California and Florida, in particular, have seen the greatest losses in average property values over the past 18 months. This of course is bad news for home owners trying to build up equity in their properties, but great news for potential investors, who now see bargains beginning to appear in most major metropolitan areas.
Surprisingly, some analysts are predicting that home prices could go even lower in the first quarter of 2008, but most experts agree the housing slump will begin to turn around by the fourth quarter of 2008, or the first quarter of 2009.
Homeowners who are able to ride out the slump will likely begin to see some relief in 2008. But for first-time homeowners, the market is plentiful, interest rates are reasonable, and prices are continuing to drop in many major markets, producing an ideal situation if you’re looking to get into your first home.
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