Mortgage Crisis Hit the Sales Value of Real Estate
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Mortgage Crisis Impacts Real Estate Sales and Values
Summary:
Experts at a US Mayors conference described the current housing downturn as the worst in 16 years. They predict property values could decrease by $1.2 trillion next year, with tax revenue losses exceeding $6.6 billion.Article:
The US housing market is experiencing a severe downturn, described by experts at a recent US Mayors conference as the most challenging in 16 years. Forecasts predict a $1.2 trillion decline in property values over the next year, coupled with a loss of over $6.6 billion in tax revenue.
California is expected to be hit hardest, with property values potentially dropping by around $630.6 billion. New York City could experience the most significant economic slowdown due to the ongoing mortgage crisis.
The US real estate market, particularly the residential sector, is unstable. Rising foreclosure rates among subprime borrowers are driving prices down, resulting in a record number of unsold homes. The subprime sector continues to see the highest default rates.
A recent report from the National Association of Realtors highlights the worsening situation. It reveals that existing home sales in October experienced the largest drop in eight years, declining in one-third of US cities due to stricter lending practices. Nationwide, home sales have decreased by 14%.
October’s seasonally adjusted annual rate for existing home sales, including various housing types, dropped 1.2% to 4.97 million units, down from 5.03 million in September 2007. This is 20.7% lower than the 6.27 million units sold in September 2006.
New home sales in October showed a slight increase, with a seasonally adjusted annual rate of 728,000 units, reflecting a 1.7% rise from September's 716,000 units. However, this is still 23.6% lower than the 952,000 units sold in October 2006.
While the 1.7% increase is modest, there were some positive signs. Sales improved in all regions except the West, with the Midwest showing a 14.3% month-over-month increase. Although three of four regions remained below October 2006 figures, the Northeast experienced a significant 43.6% increase compared to the previous year.
Inventory levels also offered a glimmer of hope. The national supply of new homes for sale dropped from 9.0 months in September to 8.5 months in October.
Experts point to the declining value of mortgage-backed bonds as a major factor forcing US banks and financial institutions to write down over $45 million and tighten lending standards. Falling home prices have also complicated refinancing and selling processes.
You can find the original non-AI version of this article here: Mortgage Crisis Hit the Sales Value of Real Estate.
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