Values of Foreclosed Properties Crash to All-Time Low
The US economy is going through one of its challenging phases. Unemployment is at its peak and people are faltering on mortgage payments. Hence, foreclosures are common. Now the value of the foreclosed properties has crashed to an all-time low. Normally home buyers buy a property with the notion that its value will appreciate over time. But in certain counties of the US, exactly the opposite has happened. Buying a home is no longer a long-term profitable investment.
In fact, in certain counties, home prices have crashed to 1999 levels. At the time, the housing boom had not even taken place. There are nine ZIP codes in Palm Beach and Broward counties where houses sold in July at prices which were even lower than July 1999. Take, for instance, Michael Keigans, who stays in the Deerfield Beach. The ZIP code of the area is 33441. Here the average price was merely 6 per cent off what it was in 1999.
Keigans says that investment in homes no longer pay off. Gone are the days when a person increases his net worth by purchasing a property. Owners who bought homes a decade ago in the Hallandale Beach ZIP code of 33023 paid an amount of $120,000. Now these homes are carrying the price tag of $100,000. That means the people who had been clinging on to their homes with the hope that their value would appreciate have lost money in the process. The Delray Beach residents also have a similar story to tell. Most of them have taken a 40 per cent hit on their home values.
So what are the factors that are responsible for the plunging home values? Many of the people living in these areas belong to the low-income category. They are sub-prime borrowers with bad credit history. Hence, when these people defaulted on loans, foreclosures became a common phenomenon. As one house after the other became a foreclosed property, prices of homes dipped in the area.
Small wonder, then people are taking a hit on their homes. It’s very sad that many of these people were not propelled by the housing boom. This was revealed by a housing analyst Mike Larson. Naturally, there are some big losers in the game. In the Deerfield Beach Zip code of 33441, the average sales price of homes is $135,000. This has climbed down from the figure of $144,000 in 1999.
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