Last month, home sales totaled 1,307, up from the 1,116 for the same month a year ago. Meanwhile, month-to-month median prices dropped by almost 2 percent, a smaller decline than in August. Industry experts are hoping that the trend could mean the market’s decline is nearing its bottom. July to August prices dropped by 5 percent.

Similarly, the median price of $506,000 last month was down by 8 percent compared with $550,000 the same month the previous year. Industry experts said that the drop in median price was due to the large number of low-priced homes being sold.

Experts noted a record high number of bank foreclosure properties for sale, with nonowner-occupied purchasing above average. They summed up the current market activity as very strong, with many purchases taking place due to the federal tax credit that motivated first-time buyers.

But they pointed out that the market is not yet out of the woods, citing the growing number of foreclosure properties which indicated that the economy is still not strong.

Recent market data showed a slight decline in the number of foreclosed homes in the Bay Area. However, foreclosures increased in Santa Clara County, accounting for 27.2 percent of the total condominiums and houses sold last month, an increase of 26.4 percent from August.

Industry experts said that foreclosure remains unabated because homeowners could not modify their loans into affordable rates and many have lost substantial equity on their houses. They pointed out that in many places, home prices were almost flat. However, the trend could change if a new wave of foreclosure starts coming into the housing market.

Furthermore, mortgage delinquencies continue to rise, resulting with many distressed homeowners who could end up modifying their loans, getting short sales or going into foreclosures.

Experts said that any price stability being experienced right could be rock again by another wave of bank foreclosure properties for sale.

According to industry analysts, the growing number of properties with negative equity is a predictor of the coming wave of bank foreclosed homes in the area. They said that many homeowners who have negative equity on their properties prefer to walk away from their houses and allow lenders to foreclose them.

Additionally, market data showed that 8,120 properties in the region were nearing the negative equity position. This means that these properties were within 5 percent of seeing their values to less than the mortgage owed by their homeowners. Analysts pointed out that nearly 50 percent of homeowners in the region are either close to having greater debt that their houses are worth or owe more than the value of their properties.

But Lucas County Foreclosure Task Force co-chairman Wade Kapszukiewicz does not believe that just because the property is underwater it is more at risk of foreclosure. He said that being underwater meant that people do not have the same net worth that they have five years ago, adding that they need to work more for less money.

Industry experts said that current market data showed that the housing situation in the metro Toledo area is getting worse. They pointed out that 2008 ended with 30,140 properties or 28 percent of all houses in metro Toledo area with mortgages were in a negative equity position.

The rate of properties with negative equity nationwide was 32 percent or 15.2 million. Statewide, 39 percent or 861,528 properties have negative equity.

Some industry experts viewed the figures with skepticism saying that most housing values do not represent the market.

Meanwhile, the foreclosure crisis in Ohio was fueled by massive layoffs in the manufacturing and automobile industry. A few months back, statewide foreclosure activity flatten due to the increase in the number of bankruptcy filings, which stop the foreclosure process.

But industry analysts are expecting foreclosure activity to pick up soon as more and more homeowners would choose not to spend more mortgage payments on properties that have negative equity.

Home sales are improving brought about by the flood of buyers who took advantage of low interest rates and federal tax credits.

But the issue of the real market recovery is a cause of debate among industry experts and economists who offered conflicting opinions on when the housing market will reach the bottom. Some pointed out several factors that could hold off market recovery, including the increasing unemployment rate, new real estate appraisal rules, potential backlog of bank foreclosed homes and lingering doubts about the economic condition.

Industry experts who are cautiously optimistic about the current market situation said that many buyers are flocking to the market, taking advantage of low prices. But they are looking at the overall economic condition which they viewed as very fragile.

Senior economist Kirk Lesh of the Center for Economic Research and Forecasting at the California Lutheran University said that economic weaknesses could greatly hurt the housing market recovery in the county which has a high number of government jobs.

Lesh is anticipating an increase in unemployment this year until 2010. And he said that government workers who will get furlough would hold off buying new homes.

He added that the total foreclosure rate in the county is lower compared with other communities in California. But he is quick to point out that bank foreclosure houses rose, with 122 properties posted last month, an increase from 83 for the same month the previous year.

Other industry experts and economists said that volumes of foreclosure houses will flood the market soon as foreclosure moratoriums are lifted and banks will start to release bank foreclosed homes for sale.

Lesh said that currently, the housing market in the county could go down farther, admitting that the market has not yet reach the bottom and no dramatic increase in prices or sales are expected in the offing.

But other economists view the local residential real estate market with colored glasses, pointing out stability of home prices since March and dwindling of foreclosed houses for sale to give way to conventional home sales.

According to the study, out of 122 properties in the area, one received a foreclosure filing and was at risk of becoming a foreclosed home, representing .82 percentage point of the total.

Overall, Kansas City is better off compared with other cities with populations of not less than 200,000, earning it the 86th position in the ranking of metropolitan areas nationwide.

Although some real estate professionals have confirmed the downward trend in foreclosure activity in the city, they are quick to point out contrasting results of other market reports.

Another report indicated that the number of foreclosure properties in the Kansas metropolitan area rose last month, compared with June a year ago. This report examined active mortgages as against the overall number of households.

According to the report, nearly 1.3 percent of the total outstanding mortgages were foreclosed last month, compared with nearly 0.8 percent foreclosures in June last year, showing a difference of about 0.5 percent.

The number of foreclosed home auctions gave credence to the reported foreclosure increase. A recent auction showed 88 foreclosed houses across western Missouri sold, generating sales of $3.9 million.

Greater Kansas City Housing Information Center executive director Patricia Gilmore-Wilkins said that many distressed borrowers continue to struggle financially, adding that there is no decline in the number of homeowners requesting for the center’s services.

Industry experts said that the decline in foreclosure rates presented by the first market report was due to the reluctance of lenders to foreclose because the process takes a lot of time and can be costly.

They said that currently, lenders are more cautious when it comes to repossessing distressed properties. However, they expect some forthcoming changes in the housing market by way of another surge in the number of foreclose houses by the end of 2009.

Greater Kansas City Local Initiatives Support Corp. executive director Julie Porter said that bank foreclosed homes will start flooding the market again, and this time, the trend would be driven by unemployment.

She said that foreclosed properties in urban neighborhoods will not slow down due to the poor situation in the jobs market.

In Washington County, Utah, the foreclosure rate in the region remains higher than the national rate. A report about the region showed that a total of 3,747 bank owned foreclosure filings were posted from June of last year to May of this year. The figures represented an average percentage of 10.27 foreclosures daily.

In South Florida, which is also one of the regions hardest hit by the foreclosure crisis, lenders filed over 52,000 property repossessions in the first half of this year. And a report from Condo Vulture LLC is anticipating that foreclosure filings in the region will reach over 100,000 before the end of this year.

The same report explained that filings for bank owned foreclosures are increasing at a pace of almost 2,200 every week. Meanwhile, the report noted that the number of resale homes on South Florida market is declining at nearly 900 every week.

Business analyst James Foxx explained that the rising number of foreclosure properties may be a bane to homeowners, but it is a boon for homebuyers. He said that the increasing foreclosure in the country has resulted to more foreclosure properties on the market which are available for sale at deep discounts. He added that both investors and first-time homebuyers can now purchase foreclosed homes priced below their market values.

On the other hand, commercial foreclosure is also on the rise. A report about the commercial real estate market stated that commercial foreclosure activity rose by 12 percent from January to July of this year, compared to the previous year.

In New Jersey, the number of commercial foreclosure continues to soar the second quarter of this year, representing an increase three times that of last year for the same period.

The biggest concern in the commercial real estate is the performance of the retail market nationwide. So far, the total value of commercial bank owned foreclosures reached $31 billion. And the numbers keep on piling up every month.

The current housing market is heavily laden with short sales and foreclosures that help drive down prices. About two-thirds of houses for sale are owned by lenders while short sales and foreclosures accounted for majority of properties on bank foreclosure list. Short sales are properties that are priced less than the total mortgage that homeowners owe to their lenders.

According to industry experts, the great number of foreclosure properties and short sales on bank foreclosure list creates an unpredictable climate for homebuyers.

They suggest that potential homebuyers should be prepared to make a closing when a buying a property by arranging their finances first before making an offer. In the current market, the success of buying short sales and foreclosure houses is contingent on the buyer’s ability to close a deal immediately.

Industry experts observed that potential buyers who have cash and a combination of patience and aggressiveness are the ones who get to have the best deals. They said that banks may require potential buyers to submit a loan application and they may offer reduced closing sale costs if buyers get mortgage loans through them.

Meanwhile, experts warn potential buyers about the intense competition for deeply discounted short sale and lender-owned properties. Earnest money, or the sum potential buyers pay to show their eagerness and sincerity in pursuing the deal, will give buyers leverage on the deal.

However, in the case of properties owned by banks, earnest money are usually non-refundable, meaning buyers could not recover their down payment if they back out of the deal.

On the other hand, prospective homebuyers may find financial help with the U.S. Federal Housing Administration’s (FHA) 203k loan program. The mortgage loan program includes funds for home refurbishment.

First-time homebuyers find the 3.5 percent initial payment and loan cap of $346,250 quite a bit appealing. But the loan amount requires the inclusion of repair costs and the property needs to be appraised for the total amount.

Real estate expert R.L. Brown agrees that now is the right time to buy properties on bank foreclosure list because even if housing prices decline, low interest rates indicate a return on investments.

Housing Predictor editor Mike Colpitts said that Washington D.C. area should expect about 300,000 additional bank foreclosure homes this year until 2011. Housing Predictor looks at trends in local and state real estate markets.

According to Colpitts, many homeowners are in trouble of going into foreclosures but the process was delayed due to repossession moratoriums that mortgage companies, Federal Home Loan Mortgage Corp. and Federal National Mortgage Association put in place last fall and expired the end of March.

He said that the temporary foreclosure moratorium created an artificial lull and backlogs of troubled mortgages waiting to be processed.

Deputy director at the Center for Regional Analysis at George Mason University, John McClain said that recent data showed that foreclosure rate in the D.C. area has leveled off. However, the foreclosure problem is fast spreading beyond subprime mortgages, the category real estate experts deemed to be the most risky.

Jill Landsman of the Northern Virginia Association of Realtors said that the next wave of bank foreclosure homes will come from alt-A or alternative A-paper loans. Adjustable rate loans were taken out by marginal homeowners who had insufficient financial data. An adjustable rate mortgage usually resets every three years.

Colpitts said that many homeowners who took out adjustable rate loans may not be able to refinance their mortgages when it is time to reset because the values of their properties are less than the total mortgage they owed. He added that some areas in the region, such as Prince William County in Virginia, are experiencing a decline of almost 50 percent in home values.

Meanwhile, Landsman noted that loans that are not usually high risk such as 30-year fixed-rate and conventional adjustable rate mortgages are also expected to be in trouble, affected by the rising unemployment rate and declining home prices.

Colpitts predicted that home values in the Washington metro area will drop by another 11 to 15 percent. He believed that the coming flood of bank foreclosure homes in the region will also include a number of expensive houses, a category that is expected to experience the steepest value declines.

Nevada Association of Realtors President Devin Reiss said that to understand the state’ foreclosure crisis, there is a need to distinguish between an unhealthy and healthy homebuyer. He believes that Nevada homeowners can help stabilize the housing market by avoiding circumstances that may result in Bank Foreclosure Properties.

The survey, conducted by NV Data Mine and SGS, also showed that over 60 percent of foreclosure properties within Nevada were owned by married couples, while 24 percent of distressed homeowners were earning below $15,000 annually.

Market data showed that in April, Nevada had the highest foreclosure numbers nationwide, with one out of 68 homeowners receiving a filing for foreclosure which was five times more than the national average. Nevada’s total Bank Foreclosure Properties rate in May was up by 111 percent compared with year ago period, but declined by 18 percent from April’s total.

Real-estate owned properties accounted for 80 percent of the state’s housing market, putting pressure on the home prices to go down.

Meanwhile, over 90 percent of foreclosures were single-detached family houses and 32 percent were between 1,500 to 2,000 square feet. Results of the Nevada Realtors’ study also showed that about 34 percent of respondents were paying more than 50 percent of their income monthly on their mortgage loans.
Homeowners who were paying 56 percent from their income to loans accounted for the largest portion in foreclosures. On the other hand, about 24 percent of respondents were paying 40 percent or less of their monthly income on mortgage loans. Additionally, 24 percent of respondents either refused to answer or were unsure about the percentage of their income that was used to pay their mortgage loans.

Furthermore, over 68 percent of respondents lost their jobs a year before their foreclosures. Meanwhile, 11.7 percent of respondents had unexpected bills to pay and 7.8 percent claimed that they had additions to their families.

Finally, 61 percent of respondents believed that the type of mortgage loan is a primary reason why their homes were turned into Bank Foreclosure Properties.

According to the IHS, home prices in Los Angeles County are undervalued by 6 percent because of bank foreclosure property problem. The IHS calculation of home prices is based on the area’s incomes, interest rates, market discounts, population density and historic premiums.

IHS also reported that Orange County’s properties are undervalued by 11 percent while Inland Empire is 16 percent undervalued. But the worst undervaluation is experienced by San Diego with 21 percent and San Francisco with 25 percent below normal.

Director of the University of Southern California’s Lusk Center for Real Estate Richard Green said that houses away from the coasts are becoming cheaper. He pointed out that properties in inland areas are bargains in proportion to rents and income, adding that some properties are even selling less than their construction costs.

Green is doubtful whether California would be able to overcome its bank foreclosure property crisis considering the state’s inability to resolve its budget problem and the increasing unemployment rate.

California Employment Development Department’s April data showed that the state’s unemployment rate was 11 percent, the fifth highest nationwide.

Meanwhile, IHS said that it is too early to tell if the housing market has reached its bottom as joblessness continues, bank foreclosure property rate remains elevated and consumer confidence is low due to economic uncertainties.

Industry experts believed that California’s housing market needs to trim down its backlog of bank foreclosure property and prevent the over 100,000 possible foreclosures. MDA Dataquick noted that in the first quarter of this year, 135,431 homeowners are in default, which is the start of the foreclosure process.

On the other hand, foreclosure properties are usually sold at bargain prices by lenders who do not want to be burdened with a large inventory of abandon and vacant repossessed homes. This development subsequently pulled home prices down.

Furthermore, the purchasing ability index of the National Association of Home Builders rose to a new height with 73 percent of properties sold in the first three months of this year affordable to families who are earning the $64,000 average median income.

Experts are one in saying that the housing market’s recovery depends on how the state address its bank foreclosure property and unemployment crisis.

The CRL estimates followed the Mortgage Bankers Association’s (MBA) National Delinquency Survey for the first quarter of 2009 which showed that about 12 percent of mortgage loans are at risk of being added to the growing bank foreclosure listings. According to the MBA, the figures are the highest it has ever recorded since it started tracking the mortgage industry 37 years ago.

CRL President Michael Calhoun said that the rapid increase of foreclosure proceedings on all types of mortgage loans is alarming. He pointed out that foreclosures has brought devastation to the economy and neighboring families living in areas severely affected by foreclosed homes. He added that foreclosure is the root of the housing crisis and it will continue to wreak havoc on the market if it will remain unabated.

CRL estimated that 2.4 million properties are at risk of being added to bank foreclosure listings in 2009. And without a doubt, foreclosures have reduced market values of about 70 million properties, totaling $502 billion or $7,200 each family.

CRL predicted that the number of households affected by foreclosures will increase to about 9 million and incurred losses of $1.9 trillion in terms of lost home value to nearly 92 million neighboring families.
According to industry experts, based on the track record of the mortgage industry so far, loan modifications will not succeed if the programs will fail to provide affordable monthly payments to distressed homeowners.

Because of the immediate need to address the foreclosure problem, the Obama Administration has developed a plan that includes enhanced incentives for mortgage loan companies to encourage them to work out loan solutions with distressed homeowners.

The Obama Administration’s revised guidelines encourage early intervention and modification of loans to reduce monthly payments and make them affordable to homeowners to help them avoid bank foreclosure listings.

Industry experts believed that about 6,500 foreclosures are being filed daily. They call on loan servicers and lenders to work out solutions with homeowners to increase loan modifications and help people keep their properties away from bank foreclosure listings.