Bank Foreclosure Properties for Sale Boost Home Sales

by Donald Hanz on Foreclosure Rates

Home sales in Santa Clara County, California jumped by 17 percent last month, buyed by bank foreclosure properties for sale. The increase in total home sales in September compared with the same month a year ago is due to low mortgage rates and the flood of first-time buyers who want to take advantage of the $8,000 federal tax credit before it expires by the end of November.

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.