According to the National Association of Realtors, the average price of a single-family home in the United States increased to $215,800 as of November 2003, a 6.1% increase in value over the previous year. Homes in the Northeastern states saw the biggest jump in property values to 9.6% while the Midwest came in at a mere 4.7% respectively.

Bar graph of Average Home prices

By far, the primary fuel for the rise in home values has been the drop in interest rates to the mid single digits. The power of lower interest rates is multi-faceted. As rates got lower the refinance market took a healthy boost. Homeowners, raced to get their mortgage payments lowered, thereby creating additional wealth in the US economy.

Interest Graph

In recent years, many first time homebuyers realized, that the cost of a monthly mortgage payment was not significantly different than the rent they were currently paying. This edged home sales in the first time homebuyer market. According to David Seiders, chief economist at the National Association of Home Builders (NAHB), “condominium sales remained strong in the third quarter, but demand for rental apartments continued to lag. The low rates have drawn current and prospective renters into homeownership.”

With the real estate market running in overdrive, finding foreclosure opportunities has been a challenge this year. The opportunities have definitely been there, but the dedication and commitment required to source these opportunities has been tough.

In a hot real estate market the default on loans are generally low. A homeowner in default, does not experience difficulty selling his home for a profit and circumventing the foreclosure process. The appreciation rates are so strong that most homeowners can walk away with a net profit after paying what is owed on their home to the bank.

Few things can change the foreclosure outlook in the forthcoming months, rise in interest rate, peak in home values or a slowdown of the US economy. Currently, the US economy is coming out of a three-year-old recession. The average interest rate have already edged up from their recent lows. If the economy overshoots the projected GDP estimates, the Federal Reserve may raise rates to prevent the economy from overheating. If the economy unfolds into this scenario, foreclosures could see a quick uptick.

One of the many indicators used by the professionals to measure the health of the real estate market is an increase in flipping rates. Investors who flip properties, buy real estate with the intention of selling the property for an immediate profit. Any increase from the current level could indicate a different mindset of the current investor. Currently, the investors’ preference has been to hold the asset because it steadily appreciates overtime. If this climate changes, an investor might look to flip the property quickly in order to prevent his paper profit from turning into a loss as property values climax.

Another “indicator” to watch on the foreclosure4sale.com homepage is the number of properties currently in foreclosure within the REO process. As of this writing the number is at 62,562. Any significant increase or decrease in this number may signal a different environment emerging.

Foreclosure opportunities definitely do exist, however vigilant research is required. We at Foreclosure4Sale.com are committed to supporting our clients with information and data, to help them make better investment decisions.

We would like to wish you a very Happy, Healthy and a Prosperous New Year.

Your team at Foreclosure4Sale.com

Sources:
National Association of Realtors
Freddie Mac’s Weekly Mortgage Survey