 According to data released by the National Association of Realtors, single family home prices dropped 7.7% in the first quarter of 2008. The data reflects the biggest year-over-year decline in home prices since the N.A.R. first began compiling home prices in 1982. According to the data, median home prices dropped to $196,300 in the first quarter of 2008. This is down almost 5% when compared to October, November, and December of last year. One reason for the decline in housing prices is the slowdown of sales of higher priced houses as a result of very few jumbo loan originations. For example, in California during 2007, jumbo loans (loans over $417,000) accounted for 40% of the homes sold. In 2008, only 10% of home loans made in California were jumbo loans. This reflects the slow home sales in higher priced areas. However, in February, the government changed the cap on jumbo loans from $417,000 to $729,000. These so called "jumbo conforming loans" are backed by the government enterprise giants Fannie Mae and Freddie Mac. But despite the new standards, rates on these types of loans continue to increase by as much as 1-2% above average mortgage rates. As a result of the higher rates, buyers are being discouraged from purchasing higher priced homes. Also impacting the data is the surge of foreclosures across the nation and in the hardest hit areas like California, Florida, Las Vegas, and Rust Belt region. While some areas threaten to get worse, other markets are beginning to see some buyers come down from the fence and purchase heavily discounted properties. (Posted by K.Skowronski)
Related Articles Easy Ways to Green Your Home and Save Money Real Estate Investing: How to Successfully Flip Properties Be a Successful Real Estate Investor in any Type of Market |
