Comments on: One Advantage to Home Foreclosures: Lower Home Prices

By: Jessica Bennet

Jessica Bennet — Sat, 28 Jun 2008 09:39:21 +0000

It’s true that foreclosures have led to decline in home prices. But this decline is creating problems for those who are opting for short sales to avoid foreclosure. It’s getting difficult for them to locate a buyer who can pay them something closer to the loan balance, so that they don’t have to pay much from their pockets to cover the entire loan balance.

Regards,

Jessica

By: JLP

JLP — Sun, 30 Mar 2008 13:35:49 +0000

Jeremy,

I’d even be happy with $120 per square foot as it would put my house value at around 3X what my wife and I paid for it in 1999. My best estimate is it is worth about $80 – $90 per square foot.

By: Jeremy

Jeremy — Sun, 30 Mar 2008 05:30:24 +0000

Wow I’d love it if our area was even close to $350 per square foot and could sell for even a fraction of that. Around here, we’re closer to $120 per square foot, which hasn’t really changed over the past 3 or 4 years.

By: JLP

JLP — Sat, 29 Mar 2008 13:26:50 +0000

Thomas,

Wow! At $350 per square foot, my house would be worth $796,250!

By: thomas

thomas — Sat, 29 Mar 2008 05:23:35 +0000

I guess I’m one of the lucky ones where not only did the growth period last longer and go higher than a lot of areas, but the decrease is negligable. I saw somewhere a 3% drop in prices – pennies!

It’s amazing to me that I can’t figure out a way to get a house where I am. Maybe I’m still stuck elsewhere in my mind, but i just can’t buy something built in the 60′s for $350+/sqft

By: Traciatim

Traciatim — Sat, 29 Mar 2008 02:21:57 +0000

Up in Canada our home market is still boiling, and everyone here is saying that we’re not going to see the downturn because of tighter lending standards here. That doesn’t stop the average home selling price in Vancouver (British Columbia, Western Canada for anyone who may not know) reaching $623,517. Add to that the median income for the same city is somewhere near 60K or so . . . that puts the average home at 10 times the median income of the area. The average home cost in the city is 17% higher than it was last year . . . nope, no bubble here.

Maybe I’ll be able to pick myself up a vacation home in the aftermath.

By: Meg

Meg — Wed, 26 Mar 2008 18:40:58 +0000

I too agree that prices should come down; it’s only fair.

I don’t really feel sorry for people stuck trying to sell either. When the dot com bust happened and the market tanked, many lost much of their savings because of their risky, undiversified bets. Others (and those same individuals) got to buy low and are now reaping the benefits. This is the same thing, only it’s more tangible so everybody is freaking out (justifiably). Those forced to sell homes at a loss will also be able to buy their next house much more cheaply if prices are allowed to come down.

I have three little sisters in college who will most likely be seeking to enter the housing market in the next 5 years. Why should they be priced out of the market, or be forced to pay $500,000 for what is really only a $250,000 home just because lenders and speculators (incl “regular” homeowners who were really speculators) drove up prices and now the government is “fixing” the problem by trying desperately to prop up inflated prices?

By: Ron@TheWisdomJournal

Ron@TheWisdomJournal — Wed, 26 Mar 2008 14:35:23 +0000

I’m just hoping to catch the market like I did in 2004. I got a 5% fixed rate!

I’m also hoping to sell this house and move back to my hometown. I know hunting for the new home will be great, it’s the selling of my current home that I’m worried about.

By: S. B.

S. B. — Wed, 26 Mar 2008 02:52:17 +0000

I generally agree with the sentiments of your article and the other comments. However, do keep in mind that although Case/Shiller is a “national” index, it only means that it is national in scope. It only surveys 10 large cities (or 20 large cities — there are actually two indexes) across the country. These are exactly the places (e.g. Miami, Las Vegas, Phoenix, Boston, etc) that ran up the most and will come down the most.

Outside of the major urban areas, the rise was not nearly as dramatic, and most likely, the fall won’t be as dramatic either.

By: Jeremy

Jeremy — Tue, 25 Mar 2008 19:03:55 +0000

It is only a matter of time before home prices began to fall from their peak. You can’t have a market continuously accelerate upward. Whether it is foreclosures causing the problem, or simply a lack of buyers, it was bound to happen.

The thing about trying to offer incentives to keep people in homes that they might otherwise be foreclosed on is that it will not fix the problem.

If someone can’t afford their payments, they are obviously in more house than they probably need. What people tend to forget is that along with a big house comes MANY other big expenses that can’t be fixed by freezing their mortgage rate. You still have property taxes, you still have large utility bills to pay, and these costs are going to be there whether the bank allows you to stay in your home or not.

Trying to keep people from foreclosure is only going to prolong the problem. Prices need to come down, there is no way around that, and yes, having foreclosed properties can have negative effects in the surrounding community, but keeping someone in the house just for the sake of keeping it occupied when they still can’t keep up with their bills won’t solve anything in the long term.