Flood of Foreclosures bringing down Property Values

foreclosures in North Carolina

Flood of foreclosures for sale are bringing down property values in the traditional market as well as the market dealing with distressed sales. There is more supply than demand leading to the inevitable – drop in property values. There are hardly any buyers because of the recession and the credit squeeze. Lenders are shy of advancing loans.

In May 2009 foreclosures of homes right across North Carolina were down by 35% from what it was a year ago according to RealtyTrac. In May the foreclosure rate in USA was 1:398. But even those who have not been foreclosed upon many be affected by the foreclosure mood of the market in an indirect way

The Acadina locality of Parkton is thick with foreclosed units. Kathy Wood who deals with real estate said that the homes “were selling at a very inflated price.” If the number of foreclosures were small the real estate market would not be affected. Wood analyzed, “If I was to sell my house, an appraiser could not use the foreclosure down the street as a comparable, because he would have to compare it to other existing resales and not to foreclosures.”

But in regions like Acadiana this explanation does not work. There have been so many foreclosures that the appraisers have no other alternative but to compare.

Woods added that most of the banks who have taken over possession of the houses after foreclosure have property-preservation companies that see to the maintenance. Alternatively it is the job of realtors. Wood said, “What I would say to a neighbor is if the house is not being maintained, give the agent whose sign is in the window a call because the banks do expect us to do that.”

Even the best of neighbourhoods get stigmatized if there are a couple of foreclosures. She noted that there have been quite a few foreclosed houses selling at a relatively higher price this current year. She said, “I’ve probably had more listings over $200,000 than I’ve had my career of doing foreclosures.”

One of the lucky few who have managed to make a bargain purchase in the foreclosure market in Acadiana is Ben Mahaffey. He commented, “It’s awful to see all the high grass, and all that stuff floating around here, everything in disrepair. But it’s not that bad.”

The North Carolina Housing Finance Agency provides information to those who are in trouble and facing foreclosures for no fault of theirs.