As Foreclosure Expands, Resale Prices Plummet

Time icon December 15th, 2008 by Autor Joseph Smith

The increase of home sales in areas where prices are down is logical. In Merced, home prices plunged by 43.2 percent to $130,300. The county is the most inexpensive market in California. The median price of a standing house in Fresno is down by 32 percent to $168,000 from last year while home prices of brand new homes decreased by 12.7 percent to $248,000.

Bank-owned properties are the targets with 56 percent of the 799 re-sales last October. Foreclosures make up 15.4 percent of the market in October 2007.

If you take into account the new houses and condo units, the total home sales of Fresno reached 1,406, a 40 percent rise from October 2007.

Some central San Joaquin Valley counties had these soar: sales in Madera, Merced and Tulare increased 78.7 percent, 177.5 percent and 21.3 percent demonstrating the connection of depreciating prices and rising home sales.

Around 30 percent of the sales were investors like banks. The lenders are even prepared to shoulder refurbishing of the foreclosed homes required by the Federal Housing Administration. An example is the Countrywide Financial, agreeing to spend $2,000 to re-paint the exterior and window sills of a foreclosure plus paying $6,000 in closing costs. That was on top of the $5000 discount.

Michael Gavin, a real estate agent of Fresno saw that traditional sellers were forced to bring down their prices to match the competition topped by foreclosed homes. But they are still losing to the competition.

The president of the California Building Industry Association sees a loss in brand new housing again due to foreclosures. 230,000 houses must be built every year to cope up with the population, and yet not even 30 percent of this was built. The association hopes to promote the building of new houses by asking the Congress to temporarily raise the homebuyer tax loan of $7500, and to make it non-repayable.

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