3. Fewer foreclosure filings and sales
On average, foreclosed houses sell for 30% less than similar homes in the same area, although the figure varies by market, says Rick Sharga, a senior vice president at RealtyTrac.com, which tracks foreclosures. In areas hit hardest, especially cities in Sunbelt states, foreclosed homes often sell at half the price. As foreclosures increase, they drag down the average price of homes in a neighborhood.
Research foreclosed properties in a city or town at RealtyTrac.com, which tracks properties in various stages of foreclosure, including foreclosure filings, auctions and bank repossessions. Once your on the Web site, click on "trends" to compare foreclosure activity with nearby areas. Some of the research is free, but detailed information, including property addresses and loan histories, costs $49.95 month after a seven-day free trial period ends.
The faster foreclosed homes are sold, the sooner home prices can stabilize. The Hope for Homeowner’s Act of 2008 earmarked $4 billion for communities to buy and fix foreclosed and abandoned properties. Localities that receive a portion of this money will boost their home values, since they’ll be taking excess inventory off the market, says Sharga. Call your local government to find out if it has applied for this money.
4. Inventories are declining
In most areas where "for sale" signs are common, home prices are far from recovery.In general, when more than 2% of homes in a neighborhood are selling at the same time, inventory is high, says Dean Baker, a co-director at the Center for Economic Policy and Research. As the number of homes for sale decrease, sellers have more leverage and a better shot at getting an offer close to their asking price.
Look at the month's supply of inventory, or how many months it will take at the current sales pace for inventory to be depleted. Five to six months is the normal range, but the current average is just under 10 months, says DeVol. (This varies by metropolitan area.) Also, areas without new housing construction will likely see a recovery first since they have less inventory to sell, says Zandi.
On Trulia.com, search a town or city to find how many homes are on the market. Then, click on the "stats & trends" tab and scroll down to the chart titled "number of listings," which will show whether listings are on the rise or declining. (One caveat: The comparison only goes back one month.) For more extensive comparisons, contact your local association of real estate professionals.
More from MSN and SmartMoney
5. The list-to-sales price ratio is shrinking
On a national level, homes are selling at around 5% to 10% below their asking price, says Baker.Look at list-to-sales price ratios, which is the difference between the listing price of a home and the price at which it sold. If the price difference is shrinking for an area that suggests the real estate market is improving, says Michael Evans, the president of the American Society of Appraisers and owner of Evans Appraisal Service, which appraises residential properties.
On some real estate Web sites like Prudential’s, you can pull up listings that show the asking price for a home and the median home price for that neighborhood. Appraisers also can provide average list-to-sales price ratios and historical comparisons.
6. Home prices are falling
On the other hand, decreasing sales prices could mean that the housing market has hit its bottom, says Baker. They also guarantee that the buyer is getting into a market at a fraction of the price that buyers paid during the bubble.DataQuick, which tracks real property and land data, lists median sales prices and their year-over-year change in the major metropolitan areas throughout the country.
This article was reported by AnnaMaria Andriotis for SmartMoney.
Published Nov. 4, 2009
< previous | 1 | 2 |
Rate this Article
High
