There may be an upside to the nasty wave of foreclosures inundating markets across the United States, according to a Wall Street Journal article. Basically, the wounded real estate market may partially heal itself if the flood of forcs results in hefty price drops—a trend that already seems to be taking hold. Last month the National Association of Realtors recorded a 2.9 percent increase in sales of previously occupied homes over January, the first rise since July, and the median home sales price dropped 8.2 percent. The big question right now is whether prices will drop low enough to keep up with unsold inventory. According to some, the price drops could be good news for middle-class buyers, many of whom couldn’t afford to buy properties during the boom years. There’s also the possibility that investors will start to swoop in and buy foreclosures in bulk, banking on eventual appreciation. On a side note, the chart above, included in the article, doesn’t present a pretty picture of the New York-New Jersey foreclosure scene, though a lot of these are presumably in the ‘burbs and exurbs.
Wave of Foreclosures Drives Prices Lower, Lures Buyers [WSJ]
Graphic From First American CoreLogic, c/o The Journal.