U.S. Home Prices Plummet in 80% of Cities as Foreclosure Crisis Deepens
by admin ~ November 19th, 2008.Home prices fell in four out of every five U.S. cities in the third quarter, a record spurred by distressed foreclosure sales across the country. The median price of a U.S. home declined 9 % from a year earlier and sales of properties with mortgages in default accounted for at least a third of all transactions, the Chicago- based National Association of Realtors said today. Prices fell in 120 U.S. metropolitan areas, rose in 28 and were unchanged in four, the biggest share of declines in data going back to 1979. The financial turmoil sparked by the collapse of the U.S. subprime mortgage market has caused $666 billion of losses for U.S. banks, lenders and insurers. U.S. companies slashed 1.4 million jobs in the last six months, the biggest cut since 1975. “Housing is front and center of the financial crisis,” said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania. “So long as house prices are declining and foreclosures mounting, the financial system will struggle and the economy will be in recession.”
The steepest price declines were all in California. The area surrounding San Bernardino had a 39 % fall in its median home price to $227,200. Sacramento saw a 37 % decline to $212,000, and San Diego had a 36 % drop to $377,300. The U.S. median is $200,500.
Foreclosures boosted U.S. sales of single-family houses and condominiums to 5.04 million in the third quarter at a seasonally adjusted annual rate, up 2.6 % from the second quarter, the report said. U.S. foreclosure filings totaled 279,561 in October, an increase of 25 % from a year ago, according to California-based RealtyTrac Inc. They include default notices, pending auctions and repossessions.
The root cause of the surge in home repossessions is the government’s “failure to deal effectively with unaffordable home loans and unnecessary foreclosures,” Federal Deposit Insurance Corp. Chairman Sheila Bair said in testimony today to the House Financial Services Committee in Washington. “Minimizing foreclosures is essential to the broader effort to stabilize global financial markets and the U.S. economy,” Bair said. The FDIC chairman continues to promote home loan modifications to stop the foreclosure crisis. Former Ditech executive, Jeff Morris said, “California homeowners need mortgage relief with loan modifications and they need the lenders to provide them quickly.”
The five largest homebuilders reported a combined $1.09 billion in losses in the most recent quarters as consumers struggled to obtain mortgage loans. About 70 % of U.S. banks surveyed indicated they tightened standards on prime mortgage loans, the Federal Reserve said on Nov. 3 in its quarterly Senior Loan Officer Survey. Read Complete Article By Kathleen M. Howley
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WASHINGTON (AP) _ The National Association of Realtors says home prices fell in four out of five U.S. cities in the third quarter, the latest sign of how the U.S. housing market’s decline is spreading throughout the