Apparently it is official now – the United States is in a recession; a fact that many of us have suspected for quite some time.
The economic crisis is affecting everyone in one way or another, although particularly hard hit are people trying to sell their home and having to compete with foreclosed properties.
Foreclosure figures are staggering – over three million homes are expected to be in the process of being foreclosed by the end of 2008 – far more than most financial experts had previously predicted. On an average day, around 8,500 homes are now foreclosed on in the United States; the worst areas of the country for foreclosures (sometimes known in the industry as REO, or real estate, owned properties) are parts of Michigan, California Nevada, and Florida.
The reason that homeowners are finding it difficult to sell, is that they are competing with all the foreclosed properties that are now available. A foreclosed home sells for an average of 40% less than a regular home – its no wonder that sellers just can’t compete without lowering their asking price significantly. Some buyers concentrate on looking only at foreclosures, rather than regular sales – and almost 50% of all homebuyers have considered or would seriously consider a foreclosure.
Not only are sellers competing with homes for sale at lower prices, they are also in competition with a more motivated seller – the bank. A lender who sells a foreclosed home has already lost money through late or missed mortgage payments; and is paying insurance and property taxes while the home sits empty. The sooner the lender sells the house – the sooner they will recoup some of their losses.
Foreclosures tend to lower the value of other houses in a neighborhood, anyway. If you are trying to sell your home and there are several foreclosed properties within a few hundred yards of your own home – it doesn’t inspire confidence in a potential buyer. And foreclosures that sit vacant for perhaps several months tend to attract vandals and squatters. It becomes even harder to sell your home when the perception of a buyer is that the neighborhood is not what it was.
There are some steps you can take – obviously don’t sell your home unless you have to; as this just isn’t a good time to do so. Some experts feel that the recession cannot last and that things will get better, although around 22% of all homeowners are at least somewhat concerned about their own home being foreclosed. In the meantime, those who are trying to sell their property must continue to compete with the millions of foreclosed bargain properties.
