Home prices have continued to drop during the first quarter of 2011, dropping 4.6% from a year earlier according toCNNMoney.com and the National Association of Realtors. Condo prices fell ever harder by a rate of 10.4%. The main cause for this decline is the sale of foreclosed properties, which accounted for 29% of the market – a 3% increase from a year earlier.
The “distressed” homes are usually in poor condition and priced to move. As a result, they sell for approximately 20% less than conventional home sales.
The market for distressed home may expand over the next few months. There are many bad loans in the foreclosure pipeline and we do not know how many strategic defaults (people who simply walk away from their mortgage) will result. Falling prices have sent more mortgage borrowers underwater (owing more on their mortgage than their homes are worth), which makes them more likely to default.
There is some good news about the housing market, rates on a 30 year fixed mortgage are now fluctuating between 4.63% and 4.71% – the lowest levels seen so far in 2011.
What does this all mean? Buying a home right now is a no-brainer. There a great opportunities out there for buyers and it is an excellent time to upgrade from your current property. By taking a haircut on the current home, consumers can get into a new home at a much lower price than expected only a few years ago.