The average price of a foreclosed home is falling

Marketplace Staff Dec 2, 2010
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The average price of a foreclosed home is falling

Marketplace Staff Dec 2, 2010
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TEXT OF INTERVIEW

STEVE CHIOTAKIS: Now to the housing market. The price of a foreclosed home is falling on average. That’s according to a closely watched industry survey out this morning.

Marketplace’s Gregory Warner is with us this morning live to talk about it. Good morning Gregory.

GREGORY WARNER: Good morning Steve

CHIOTAKIS: Let’s just say I wanna buy a house. What kind of deal could I get on a foreclosure?

WARNER: Let’s say Steve you were in the market for a $200,000 house. That same house in foreclosure would sell for $136,000. And that’s a national average. And actually in California where you are it’s more like $122,000. And that gap between the price of foreclosures and the price of none-distressed home is the biggest we’ve seen since 2005. The other headline we’re seeing this morning and this is all according to this survey by the company RealtyTrac — fewer foreclosures are selling. Thirty percent fewer were sold this July to September than last year. Here’s Daren Blomquist who works for RealtyTrac:

DAREN BLOMQUIST: The number of sales is down, but people who are out there buying foreclosures are getting some pretty good bargains.

CHIOTAKIS: So why the dropping demand? If prices are good, and the bargains are there why are people not buying?

WARNER: There is a lot of caution and uncertainty in the housing market overall. People worry that home prices are being artificially floated by Federal Reserve lending. And then in the short term we saw that major home buyer tax credit expire in June. So Americans are buying fewer homes, foreclosed or not, than they did earlier this year. Looking forward, we might get worse numbers in the next couple of months because of how the big banks have processed foreclosures. The allegation is the banks signed off on hundreds of foreclosures a day without proper legal review. That could slow sales further because no one wants to bid on a foreclosure if they’re going to have to go to court over who actually owns that house.

CHIOTAKIS: Gregory Warner, thank you.

WARNER: Thanks.

CHIOTAKIS: Marketplace’s Gregory Warner in Philadelphia.

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