Housing Prices

Hurting home prices were big rises in foreclosures over the past 12 months, which may be getting even worse. Delinquencies more than doubled over that time and more than 155,000 lost their homes in bank repossessions during the first three months of the year. With many adjustable rate mortgages (ARMs) poised to reset this year to higher interest rates, defaults could go even higher. All that foreclosure activity added to the glut of homes on the market. The total inventory has risen to an average of 10 months worth of unsold homes. In addition, a record number - 2.9 million - of vacant homes are up for sale.The big inventory has led to aggressive price slashing and increased incentives by builders looking to sell homes. They've also cut way back on housing starts, which are at a 17-year low.Condo prices fared a bit better than single-family homes. The median price fell just 3% since early 2007. The price declines in falling markets may not have run their course. Some analysts point to low home prices in many Midwestern cities and assert there's not much room for prices to fall but Youngblood disagrees.As for the bubble markets that have already lost 30% of their values. Buble markets are expected to drop another 20% or so through February 2009.
So if the home prices keep plumetting in the bubble markets that means we are ending upside down on our mortgages. Ability and willingness to pay is going to lack which will as a result have more homes on the market. How long is it going to take for the economy to recover and stabilize housing prices, we can't tell. Our focus should remain in the areas that were not affected by housing bubble and consequently are not suffering decline in home values. Banks would be more willing to loan money in such areas and our life could be easier.