NAR Says Foreclosures Contributing to Rise in Home Sales
Wednesday, August 27, 2008
Second quarter existing-home sales rose from the first quarter in 13 states, according to the latest quarterly survey by the National Association of Realtors (NAR), released today. NAR said the increase is largely due to buyers' strong response to discounted home prices.
Sales of foreclosed properties caused values to drop in three-quarters of the nation's metropolitan areas, bringing the median price for single-family homes to $206,500, down 7.6 percent from the first quarter. According to the Center for Responsible Lending, property values surrounding a home that has been repossessed by a lender, on average drop by $5,000.
“In many areas with large concentrations of foreclosure sales, homes are being purchased below replacement cost values,” Richard Gaylord, NAR's president, said in the report. According to NAR, foreclosures and short sales accounted for a third of all housing sales in the second quarter.
Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market. “The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun explained.
As an example, in California, home sales increased by 25.8 percent during the second quarter. At the same time, the Sacramento-Arden-Arcade-Roseville metro area of California reported the nation's steepest decline in home values, where the median price of $229,500 dropped 35.6 percent from a year ago. Riverside-San Bernardino-Ontario, California had a median price reduction of 32.7 percent at $265,200. Los Angeles-Long Beach-Santa Ana and Anaheim-Santa Ana-Irvine areas also saw median home prices fall by more than 20 percent last quarter.
For a detailed look at NAR's statistics on existing-home sales state-by-state and metropolitan areas' median home prices, click here.
Sales of foreclosed properties caused values to drop in three-quarters of the nation's metropolitan areas, bringing the median price for single-family homes to $206,500, down 7.6 percent from the first quarter. According to the Center for Responsible Lending, property values surrounding a home that has been repossessed by a lender, on average drop by $5,000.
“In many areas with large concentrations of foreclosure sales, homes are being purchased below replacement cost values,” Richard Gaylord, NAR's president, said in the report. According to NAR, foreclosures and short sales accounted for a third of all housing sales in the second quarter.
Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market. “The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun explained.
As an example, in California, home sales increased by 25.8 percent during the second quarter. At the same time, the Sacramento-Arden-Arcade-Roseville metro area of California reported the nation's steepest decline in home values, where the median price of $229,500 dropped 35.6 percent from a year ago. Riverside-San Bernardino-Ontario, California had a median price reduction of 32.7 percent at $265,200. Los Angeles-Long Beach-Santa Ana and Anaheim-Santa Ana-Irvine areas also saw median home prices fall by more than 20 percent last quarter.
For a detailed look at NAR's statistics on existing-home sales state-by-state and metropolitan areas' median home prices, click here.
