U.S. Existing-Home Sales Unexpectedly Rise as Foreclosures Attract Buyers

[Purveyor]

Source: Bloomberg

By Timothy R. Homan

March 23 (Bloomberg) -- U.S. Sales of previously owned homes unexpectedly climbed in February as record foreclosures brought bargain hunters into the market to take advantage of lower prices.

Purchases increased 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales.

The Obama administration today announced details of a plan to buy up to $1 trillion in troubled assets, building on the Federal Reserve’s initiative to commit as much as $1.1 trillion more to unclog credit markets. Access to financing and a drop in borrowing costs that has made home buying more affordable may help limit further declines in sales as the jobless rate climbs.

“The decline in home prices and presence of deeply discounted foreclosures has increased affordability and enticed bargain hunters,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “However, rising unemployment, depressed confidence and expectations of home-price depreciation serve as powerful offsets.”

Economists forecast resales would fall to a 4.45 million annual rate, according to the median of 65 projections in a Bloomberg News survey. Estimates ranged from 4.26 million to 4.75 million.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aly...

[CoffeeCat]

1. So the people with the cash...

...are buying up assets at dirt-cheap prices.

Isn't this the same thing that happened during the Great Depression?

I'm sure the media will spin this into "Happy Days are Here Again!"

[slackmaster]

6. That is not a good assumption

I know several people who have either just bought their first house (to live in, not as an investment), or are seriously thinking about it.

Getting financing for an investment property is always harder than for owner-occupied. Lenders are being very careful.

[Tempest]

9. Investors are the biggest group of buyers

Reports coming out of Chicago, L.A., San Francisco and other big cities point to investors.

More than 3/4 of the home sales this year in my area were from out of town investors buying foreclosed homes.

[leftynyc]

13. Not true

The receptionist at our company just bought a house in the Bronx. I doubt she's swimming in money.

[xchrom]

2. recommend

[earth mom]

3. The well off are once again getting rich off of other peoples misery.

Is anyone really surprised?

[slackmaster]

7. Why do you believe that is what's happening?

Do you have any hard information to back it up?

[Tempest]

10. There's plenty of it

http://www.charleston.net/news/2009/mar/23/in_market761... /

Phoenix and Chicago are two other cities showing high levels of investor purchases.

[No Elephants]

4. I hope this helps some people get out of the rental market who might not otherwise have been

able to do so.

[slackmaster]

8. A friend of mine bought his first house in October

It was a foreclosure. The receiver was a subsidiary of AIG. AIG took a bath on the deal. My friend is very happy in his new home.

[No Elephants]

16. I'm happy for your friend and wish him well. No matter how much

poop is around, there's usually a pony somewhere for someone.

[pampango]

5. Maybe this will reverse the trend and rising sales will be followed by rising prices for homes.

"Home sales have been falling since 2005 and prices peaked in 2006." Sounds like sales started falling before prices fell, so perhaps sales will lead prices up now.

[PSPS]

11. Don't count on it

Houses are still overpriced and will go down another 25 - 35%. The fundamentals for proper housing pricing haven't changed -- median housing price should be between 2 and 3 times the median household income in a given area. This "bad bank" idea that Obama is destroying his presidency with will prop up the bubble a little, but it won't last more than a quarter or so.

I laughed at the headline for including the word "Unexpectedly." First, housing sales are always higher in February than in January. Apparently Bloomberg either doesn't know this or they've been instructed to come up with some "happy news." Second, having foreclosures make up a significant number of sales does not mean the market is sound or recovering. True, sales will go up as prices go down. Now that people have to actually QUALIFY for a loan, affordability is the key.

[Sin]

12. My Girlfriend and I have a bid on one atm

Now We never thought we could afford a house in this range for a while yet but it needs some work since the previous owners ripped out the kitchen with any luck we will know today if we get it or Wednesday
we have no debt now and have a large down payment So with any luck they will take our bid over the one or 2 others so still really on pins and needles yet

[Earth_First]

14. Good luck my friend!

Owning a home was a huge step in our lives. We're 29 and 30 respectively and my wife and I never thought that we'd be able to afford buying a home for our daughter. For so long we were priced out of the market despite decent jobs and no debt and above-average credit. So kudos to you my friend!

[bemildred]

15. I expect that any rise would be "unexpected". nt