Monday, May 26, 2008

Home Sales Rise in Hard-Hit Areas - WSJ

The Wall Street Journal highlights that some of the few positives uptick in sales areas are those hardest hits by foreclosure. When you have a seller willing to cut price until they find a buyer it has a positive impact on sales.

Though Americans remain wary of further drops in housing prices, the data from these areas show that some buyers are trolling for bargains. Sellers "have moved into the acceptance mode" and are pricing homes more realistically, says Thomas Lawler, a housing economist in Leesburg, Va. "I think it is the first stage of good news for the market."

Lenders' inventory of foreclosed homes has steadily increased in the past couple of years and is believed to total around half a million homes. Many lenders initially were slow to slash prices, partly because they hoped to avoid huge losses. But more lenders have been capitulating as it becomes clear that delays often merely result in lower proceeds and higher costs for taxes, insurance and upkeep.

Today's homeowner has to compete with the distressed sales and foreclosures. Some are choosing not to hoping for better times ahead, either pulling their home off the market and seeing how things look next year or renting out their home. With the lending standards returning back to normal it seems pretty clear that better times might mean that sales volume will pick up but I think it will be several years before we see anything that looks like appreciation in our local market.

Even though the WSJ article doesn't specifically talk about our local area there are some tentative signs in the latest sale reports in the hardest local hit areas that the low priced foreclosures are the ones accounting for the pickup in sales.

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