With Foreclosures and Unemployment Persisting – The Housing Sector Recovery Would be Long and Lengthy
Despite sales ticking up following the fall in prices the recovery of the real estate sector is proving to be tardy – long and lengthy. In Berkshire the situation is particularly challenging although the government has extended and expanded the tax credit benefits. The real estate pundits of the locality forecast is that albeit the sales figures have gone up the prices have not as yet touched the bottom.
Across the country in October the sale of new houses went up by 7% in comparison to the figures of October 2008. Sales of existing houses went up by 10% nationally while Massachusetts noted a gain of 17%.
But due to the clogging of the market by foreclosures the prices are still falling although at a slower pace than the previous year. The national residential house price index of SP Case-Shiller fell by about 9% during the third quarter of 2009. In Massachusetts the prices fell by 2.6% – the median across the state being noted as $287,000.
The market is being dragged down by 10.7 million borrowers having gone underwater – owing more than the value of their mortgaged properties. It calculates to a staggering 23% of all mortgage holders. The other side is that there are 24 million house owners who are not saddled with mortgages.
The position in this respect in Massachusetts is modestly better – 15% of all those with house mortgages are underwater. The effect of this on the real estate market is tremendous.
Bob Romeo the owner of Century 21 Franklin Street Associates is cutting down on his establishment by shutting down some of his branches in Great Barrington, Otis as well as Easthampton and concentrating on the net for marketing. His offices in Lenox and Pittsfield are the only operating ones. He is not hopeful of a near recovery until the stock market shows signs of confidence. He commented, “Even folks with the capacity to pay cash are treading water. We’ve changed our mission statement and our vision of the business. More than 85 percent of people seeking to purchase a home utilize the Internet as their first and continuing resource.” Since the houses are being sold at assessed rate or even less he predicts that prices would fall further. The number of deals of his company has fallen by 14% in comparison to that of the previous year.
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December 9th, 2009 at 9:25 pm
It is sad to see Real Estate companies shutting their doors. And 15% of Massachusetts mortgages in trouble is not a good sign. Let’s offer solutions and try to help others. Certainly there a foreclosure home owners that can offer solid advice to others that may be just following into this category. If we all come together we may come across solutions that have been beneficial to others.