Increased Sales of Foreclosure Properties in February
Sales of pre-owned homes in the U.S. increased in February this year by 5.1 percent, compared to January sales levels, according to the National Association of Realtors. Homebuyers were enticed by record low levels of prices and incentives offered under the Obama administration’s program to stop the increase in foreclosure properties.
The realtors’ group said the median price declined by almost 16 percent from 2008, the second largest decrease in housing market history. The increase in sales was pushed by foreclosures, as about 45 percent of the total sales in February were foreclosure properties.
According to Guy LeBas, economist of Janney Montgomery Scott of Pennsylvania, as more low-priced foreclosure properties are being offered at auctions, more and more investors are participating and looking for distressed properties to buy. Obama’s proposal to buy $1 trillion in distressed assets also contributed to the interest in the housing market, in addition to lower mortgage rates and tax credits.
Based on RealtyTrac’s research, the number of foreclosure properties increased by 30 percent during the month of February, compared to the same month in 2008. Nearly 291,000 got foreclosure notices, including default and auction notices. Homes that received their first foreclosure notices reached 161,976, a record level since January 2005.
The resale of single-family houses also increased by 4.4 percent while sales of co-ops and condos increased by 11.4 percent. Lawrence Yun, chief economist of the realtors’ group, said the median price in California increased in February while the median price for pre-owned houses nationwide decreased from $195,800 to $165,400.
The realtors said the supply of unsold houses during the last week of February represented almost ten months’ worth of supply. A balanced housing market, according to them, consists of a supply of five to six months’ worth of supply.
As shown in the increasing affordability index of the National Association of Realtors, the declining home prices due to the continued increase in foreclosure properties and decreasing mortgage rates have been enticing homebuyers and investors.
Charles McMillan, president of the realtors’ group, said that the buyer traffic increased by 5 percent in February. He also observed that the big increase occurred in the last weeks, after Obama’s program to mitigate foreclosure properties included a tax credit of $8,000 for Americans buying for the first time.
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