Bank Foreclosure Property a Threat to Housing Recovery

by Donald Hanz on Foreclosure Crisis

Last month’s 4,702 existing home sales in Las Vegas, Nevada topped the June 2004 record of 4,414. This development created some excitement within the residential real estate market which is hoping for some signs that may point to a housing market recovery. But industry experts pointed out that bank foreclosure property is a major threat to the housing recovery market.

The June median home price in Las Vegas was $140,000 which was similar as May. According to industry experts, this is the first time that the market did not experience a median price decline since August 2007 which posted an increase of 1.7 percent.

Since June 2008, median home prices fell by 38 percent and 55 percent since the market high of $315,000 in June 2006.

Industry experts said that the housing market may be on the right path to recovery based on sales and prices in June. However, the biggest concern remains the increasing number of bank foreclosure property.

The voluntary foreclosure moratorium early this year slowed the inventory of foreclosed homes hitting the market. But lenders and banks are expected to start offering newly foreclosed homes on their inventory.

Bank foreclosure property dominated the home sales in June, taking up 74 percent of the total. Industry experts attributed this trend on first time homebuyers who took advantage of the low home prices and the $8,000 tax credit.

Investors are also active participants in Las Vegas’ residential real estate market. According to market data, investors accounted for 36 percent of purchases in the market. Housing analyst Dennis Smith said that the crisis is far from over, adding that the market may have reach bottom based on sales but if home prices still remain at its lowest, no recovery can be expected yet.

It is estimated that as much as 25,000 foreclosure properties are going to hit the market, and it is expected to rise as Nevada’s foreclosure rate peaked again last month. Smith said that supply of foreclosed homes is definitely coming.

The question is, if there is going to be enough demand for bank foreclosure property as a growing number of people are losing their jobs in the past several months. Smith pointed out that job growth is needed to promote recovery of the ailing housing market.