Metro Detroit Foreclosure Home Prices Fall By 18%

October 1st, 2007

The median price of the houses in Metro Detroit went down to $154,919 in August 2007 from an initial price of $188,274 in August 2004, according to Realcomp Inc., the largest multiple listing service in Metro Detroit.

Housing prices in the region declined sharply by 17.4 percent compared to the value three years ago. Experts blame this occurrence to the surplus of homes available in the market as well as to the sudden rise in the number of foreclosure sales in the region.

In Wayne County, the median sales price of homes dropped sharply by 35.9 percent. This drop will carry on further if the number of homes pending for sale continues to rise in a similar fashion, as reported by Realcomp. In the county, 309 homeowners lost their homes to foreclosure in the month of August, which is about 18.3 percent more. Compared to this, only 10.1 percent of foreclosure sales took place in August last year, as reported by Realcomp.

The implication of declining home prices effects both the sellers as well as the buyers. For homeowners with lesser credit in their pockets, the valuation of their homes is far less than the mortgage amounts they owe.

In a few rare cases, the value of owner’s property is at par with the mortgage amount. Falling homes values will have a further negative impact on the houses bought as an investment earlier. It will further act as a hurdle for people taking loans against these houses. Lenders have also have become more apprehensive in giving loans since the market is quite shaky. However, those who are interested in buying homes can get a good deal, since there are many homes available in all areas quite easily.

Among the people who have seen a steep fall in their house values are Count John and Dana Declark residing in Warren County. The couple bought their lovely home back in 1984. The purpose of buying a three-bedroom home was not only to grant a roof to the family residing under it, but to serve as a nest during the old age as well.

However, later on, they decided to sell this house to obtain cash required for buying their dream house in Lapeer County. Currently the value of the house is $162,890 - far less than its estimated worth three years ago. Looking at the trend of the market, the couple thinks that they should sell their homes as early as possible. However, there are already a lot of homes in the market for sale. They have also fallen prey to the same trap of falling real estate prices and foreclosures plaguing the country today.