The price of homes in the United States has continued to plummet in the first three months of 2011, falling 4.6% since the end of 2010. According to the National Association of Realtors (NAR) the median price of a single family home has dropped to $158,700. Houses were not the only properties to suffer a price drop. Condo prices also adjusted, falling even harder, down 10.4% to $152,900. In 2006 the median price of a home in the U.S. was $227,100, now in 2011 it’s 30% lower.
“We’re seeing prices dropping faster than they did in 2010. That’s troubling. Falling home prices precipitated the recession and are slowing the recovery.” Pat Newport, an analyst with IHS Global Insight commented.
Foreclosed properties are to blame for this dip in home prices. The NAR says that these “distressed” property sales accounted for 39% of the market, which is up from 36% from last year. Distressed properties, which are often in poor condition, are priced low to move. Typically a distressed home will sell for approximately 20% less than a conventional home sale.
“Those sales attract speculators, investors and cash buyers who gravitate toward lower priced homes.” Lawrence Yun, chief economist for NAR commented.
The growing concern is that the market for distressed properties will continue to expand over the next few months. This leaves many borrowers in the troubling position of owing more on their mortgage balances than their homes are worth in this market. This scenario makes it very likely that borrowers will default on their loans in great numbers.
“That’s a key problem. There are a lot of bad loans in the foreclosure pipeline and we don’t know how many strategic defaults [people walking away from their mortgages] will result.” Pat Newport an analyst with IHS Global Insight commented.
McFarlin LLP has successfully resolved hundreds of mortgage disputes, foreclosures, and short sales. Don’t let the current state of the real estate market determine your financial future. Having a good lawyer at your side can help you navigate through your mortgage matters and come out on the other side. If you are facing foreclosure, we can help. Contact us today for a free consultation to discuss your mortgage issues.