Foreclosures Drag Down Real Estate Prices In Boston

There has been a great, stunning explosion in foreclosure homes and a dearth of positive prospects in real estate segment. In a recent real estate research survey, this translated into a tightening in mortgage lending which further brought down the real estate prices in several places. The decline in home prices around the nation doesn’t seem to show any indications of a stable market recovery anytime soon. After five years of rapidly rising home prices, the market stalled last year. The result was that prices remained steady or falling as sales slowed and then dipped down. Since then, lenders have made it more difficult for some people to get mortgages by tightening standards. This led to an increase in foreclosures because a lot of people who borrowed at adjustable rates ended up facing higher payments which they were unable to pay off. These problems pertaining to poor credit repayment histories brought up higher incidents of foreclosures.

The Warren Group in Boston stated that the median single-family home prices last month fell 4.9 percent, to $314,000, from August 2006. This happens to be the 16th consecutive month in which real estate prices have dipped to an all-time low. The number of sales in the period fell by 1.5 percent. Detroit led the metropolitan areas with the biggest price declines. There was an 11 percent drop from June of last year. Other areas with falling prices included Tampa, Florida, San Diego and Washington, D.C., which all recorded drops of at least 7 percent. Yet, the understanding is that August is traditionally a lean month for real estate deals.

But the Massachusetts Association of Realtors reported a starkly different view of the housing market, based on a smaller number of transactions than those recorded by Warren Group. Strangely, they experienced an increase in home prices. The realtors group said that the home prices increased by 1.4 percent, to a median of $357,000, from August 2006, while the number of sales rose a robust 6.6 percent.

The realtor group’s report is based mostly on sales brokered by real estate agents, while the larger pool of housing transactions tracked by Warren Group. This includes sales made directly by homeowners and lenders’ repossessions from borrowers and sales of foreclosed homes.

Everywhere the story is the same. There are more foreclosures because the market seems very weak. Still, a few homeowners continue to move on with a silver lining of hope.

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