Mortgages

The Upside of the Foreclosure Crisis: Affordable Homes

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In recent months, mortgage rates have been hovering at or near all-time lows and home prices have continually declined, leading to greater housing affordability. That trend continued into March as a result of foreclosure activity.

New data from the Standard & Poor’s/Case-Shiller home price index shows that the cost of buying a property now stands at a recent low, having fallen 1.9 percent from the same time last year, according to a report from RealtyTrac. And that trend is largely being driven by foreclosures.

Where these seized properties are concerned, there is a growing supply — homes that have been seized during the housing downturn, but have not been sold yet — and relatively low demand, the report said. As a consequence, prices remain extremely low and the supply-and-demand situation will likely only serve to drive them lower in the future, even as the rate of decline in this metric has slowed since the start of the new year. Currently, prices are still 35 percent below where they were at their height, just prior to the housing bubble bursting.

However, foreclosure activity has largely declined in recent months. In the 20 metropolitan areas the Case-Shiller index covers, the decline has been significant, the report said. In all, only seven of those markets — Charlotte, N.C.; Dallas; Denver; Detroit; Miami; Minneapolis; and Phoenix — have seen home prices increase. The other 13 saw them fall.

But because of the large amount of bank-owned properties, and the large amount of borrowers nationwide who still have underwater mortgages, it is difficult to believe a full-scale recovery of the housing market is going to come any time soon, the report said. However, these new lows could also be the point at which values bottom out and begin improving again, and it’s fair to be at least cautiously optimistic about the state of the market overall.

In recent months, the amount of mortgage activity from one week to the next has been considered a mixed bag by experts. At some points, the number of homeowners seeking to refinance their existing loans en masse rises, and there are increases in applications for new financing in others, as well as occasional declines or increases in both.

Image: TaxBrackets.org, via Flickr

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  • Tana Del

    1. I have been paying my student loan since 2008. I requested around 15,000 and the orginal company I owed money was changed or sold. The I refinance and also change the name and my loan increased since there over 32,000. At this period of time amost paid remainds only 4,500.00.. at the 6.5 % . My question is there is any way to get forgiven the amount, I got the loan since 1993 and another in 2000. I paid already a lot of money on interest. I passed hardship in 1998, 1999, 2001.
    what is your recomendation because the last 3 years I paid more to reduce my debt. 2008, 2009 almost 17,000.00 and 2010 and 2011 almost 10,000 .
    2.- Since I owe less money I am planing to buy my first home but my income as independent is 31, 500 in 2011, 35,000 in 2010 , 34,000 in 2009 but. The bank said I could applied only for 175,000 2 years ago I qualified for 189,000. I explained that me student loand probably will be paid in full at the end of this year my payment are around $ 262.00 and I gave between 500 and 1000 per month and still saving for my down payment. How could I prove that I am not going to owing 262.00 to get more credit line to get more credit to by affordable house in California with range is 250,000-300.000.
    I want a buy a new car for my job which is part of my business I will pay less for a new car than fix expenses for my old one how will affect my credit to buy a house?
    Thank you for you advice.

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