The Foreclosure Crush: 4 Ways Falling Home Prices Hurt the Average Homeowner (It Ain’t Pretty Y’all)
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This time last year, housing prices were almost five percent higher than they are now. According to the National Association of Realtors, the median housing price is now about $158,700. Condo prices plummeted about 10 percent more since last year, and the REO inventory is huge all across the country.
How the Housing Crisis Is Robbing the Average Joe of Home Equity
A lot of this can be attributed to the rash of foreclosures in the past year, which lower all neighborhood prices. Home sellers who are not in default have to compete with super low REO prices, so they have to slash their asking prices even further.
Home Foreclosure News Flash: Home Prices Are Dropping Faster Than They Were Just a Year Ago!
Home values are about 30 percent lower than they were in 2006, and they have already fallen another 7 percent since January 2011. This means that prices are actually dropping faster than they were a year ago. Proof?
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According to the CNN Money article, Foreclosures Crush Home Prices:
We’re seeing prices dropping faster than they did in 2010,” said Pat Newport, an analyst with IHS Global Insight. “That’s troubling. Falling home prices precipitated the recession and are slowing the recovery.
4 Critical Ways Depressed Home Prices Hurts the Average Homeowner
1. Decreased/nonexistent home equity, as alluded to above: Equity quickly disappears when foreclosures hit a neighborhood.
2. Work longer: This means many homeowners (especially those who were maybe looking to retire in the next 3-10 years) may have to work longer if they were counting on selling their home, pocketing some of the profits and downsizing;
3. Inability to refinance/modify a home loan: This is because many homeowners are pushed underwater; and
4. Decreased Job Opportunities: For many, this means the [continued] inability to find a job. As the analyst in CNN Money post above outright stated, the current recession was brought on by the foreclosure crisis. Because the housing market is intricately linked to other economic sectors (retail, manufacturing, construction, etc.), when it’s depressed, other areas of the economy suffers also.
Before you know it, you have a full-blown recession.
Who’s Profiting during this Home Foreclosure Mess
It ain’t the average homeowner, that’s for sure.
UNLESS . . . they’re investors.
Home Foreclosure Statistic: Almost 40% of Recent Sales Were REOs
Investors and savvy buyers are snapping up foreclosures like never before. In fact, 39 percent of all recent sales were REOs. That’s even higher than last year’s sales. When will it end? No one knows, but don’t expect to see a housing recovery for another 5 years.
The Ideal Time to Start a Foreclosure Cleaning Business
Many of the sold foreclosures are in fair to poor condition. Homes that are in good condition are newer – built in the last five years. Families who were foreclosed upon left their homes in disarray – another opportunity for cleanup businesses.
FYI, this presents an ideal small business opportunity for those who want to start a foreclosure clean up businesses or rehab projects.
Related Posts
Stop Foreclosure: How to Ready Your Home for a Fast (Short) Sale
P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Visit this link to see which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.
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Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.