Foreclosures - Is There A Light At The End Of The Tunnel?Posted in Hot off the Press! By Austin Smith, Tuesday, January 20, 2009.
Happy mid-January, from Sunny San Diego! Unfortunately, the Inland Empire’s falling median home price is a harsh antithesis to the joyous sunshine that is causing the glare on my computer screen. A major headline in NBC-LA’s evening newscast last night, DataQuick statistics highlight a 35% drop in SoCal home prices since December of last year. The San Diego-based research company reported an MHP (Median Home Price) of $278,000 last month for the six-county region of Southern California. This figure contrasts harshly with December, 2007’s MHP, a dazzling $425,000.
Thankfully, there is a somewhat positive flipside to this cruel coin. According to this morning’s Press-Enterprise, San Bernardino County observed the highest number of closed escrows for ‘any December since 2005’. I say somewhat because roughly 70% of these sales were homes that were repossessed when the owners failed to keep up with their mortgage.
Also from The PE: “last month’s new home sales were the fewest for a December in Riverside County since 1995…”
In review, while home sales may be up, foreclosure rates are chugging steadily along and MHPs nationwide are falling like ripe avocados. I can’t decide whether this is good news or bad news. Home values are decreasing, roundhouse-kicking homeowner equity to the moon and directly affecting America’s MHP. But, homes are still selling.
I’m leaning towards good news. We have all been aware since last fall that the RE market was headed for a rough stretch. Inherent in the economic downslide was a drastic plummet of the nationwide MHP, as well as an increase in the rate of foreclosure. OK. Old News. We all saw it coming. It is my belief that in order to breathe life back into the market, we as a nation need to put this sort of bad news behind us and look to what we can do in the future. This is a good place to start. Sure the majority of SoCal homes sold were foreclosures, but at least somebody bought them, right? Am I na�ve in assuming that people buying houses is good for the housing market? What’s wrong with people buying foreclosures? Buyers get a good deal, the bank unloads a headache, and everybody’s happy. True, foreclosures sold at a lower price serve to worsen the area’s MHP. But the MHP is only an average of the price these homes were sold at, not an average projection of the value of your home. Correct me if I’m wrong, but the MHP seems to me to be more of a report of something in the past rather than what can happen in the future.
So what do you think..? Is it just another weapon the mass media wields to keep us scared? Or does the MHP have enough relevance that we should all be stocking up on canned goods and retreating to our bomb shelters?