Foreclosures Are Driving Sluggish Real Estate Market
Citing a "collective surge" in foreclosure activity in much of the nation, Foreclosure.com, a Florida-based company, said that foreclosures are becoming a driving force in an increasingly sluggish real estate market.
According to Foreclosure.com, foreclosed properties are changing hands at almost twice the rate of existing home sales as a growing number of home loan defaults convert to foreclosures. The company said that about 30% of the foreclosure inventory nationally is being sold each month.
Foreclosure.com's six-month analysis of U.S. foreclosure data (see related table, page 5) shows that new foreclosures rose from 23,982 in January to 26,972 in March. The rate reached 27,064 in May and 26,802 in June.
However, the active foreclosure inventory has dropped from 95,073 in January to 89,352 in June. Foreclosure.com said this reflects a strong market for foreclosed real estate.
"Everything we are seeing in the current climate in the real estate industry is driven by rising interest rates and a sluggish housing market," said Brad Geisen, president and CEO of the company, in a news release. "This has fueled interest in the foreclosure market, creating golden opportunities for investors and people looking for good deals on homes."
He said that the rise in foreclosures in part reflects a trend in the mortgage market, which allowed some homebuyers to "buy more property than perhaps they could afford" due to low interest rates.
Regionally, the industrial Midwest has seen the highest foreclosure rates recently. But foreclosure activity seems to be leveling off in the Midwest. "Our midyear analysis leads us to believe the Midwest is less prone to a worsening foreclosure situation. But there still exists a high number of properties available, which creates a good buying environment," he said.
He also said the market is in the midst of a "correction" in home values, particularly at the expensive end of the spectrum. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com