Foreclosure Sales Catching Up With Home Sales

June 11th, 2008

The Warren Group, a Boston real estate tracker, has recently come up with figures that point to an alarming situation in some Bay state cities. Figures cited by the group show that foreclosure sales are now posing a challenge to home sales in these areas. The housing crisis is particularly acute in hard hit areas where the number of foreclosures is almost the same as the number of home sales.

According to the Warren Group the number of homes that were foreclosed in Lawrence in the first four months of the year was 156. This is in contrast to the 184 homes that were sold on the market. These figures suggest that bank seizures account for 46 percent of all real estate sales in the city. Not only is the state wise average almost half of this but the situation was vastly different even a few years ago.

Dorchester experienced 244 foreclosures and 340 home sales in the same period while figures for Brockton reflected 233 foreclosures and 307 home sales. In terms of percentages, foreclosures thus accounted for 41 percent of real estate sales in Dorchester and 43 percent in Brockton.

A break down of the figures shows that in certain cases foreclosures actually outnumber home sales in Brockton. This was reflected in the data for single family homes as well as two and three family homes in certain localities.

The result of this rising number of foreclosures is that real estate prices are dropping further in these areas which are already experiencing a depressed market. According to the Warren Group, there has been a decline of 17 percent in the median price in Dorchester. Lawrence has experienced a drop of 31 percent in the same period while Brockton has shown a drop of 19.7 percent. Trade analysts and experts are finding this trend alarming.

Thomas Callahan of the Massachusetts Affordable Housing Alliance is of the opinion that the current situation is disturbing because it is depressing the real estate market. Joseph Kriesberg, who heads the Massachusetts Association of Community Development Corps warns that the real estate market has not hit rock bottom yet and the numbers are likely to get worse.

Some experts attribute the present situation to the increase in high interest loans by subprime lenders during the recent real estate boom. Over the last two years many of these loans have defaulted and contributed to the turmoil in the global financial markets. This trend has been seen not only in Massachusetts but all over the country as well.