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A Housing Blue Light Special

July 29, 2008 1:12 PM

ABC News’s Bianna Golodryga reports: This morning's S&P/Case-Shiller Home Price Index, a widely watched gauge of U.S. home prices, reveals that prices continued to drop in May, erasing four years of gains. While continued declines in hard hit states like California, Nevada and Florida were expected, the latest report shows that the problem is nationwide. For the second straight month, every region in the country saw a drop in home prices from last year.

Eleven major cities, including San Diego, Miami, Orlando, Tampa, Las Vegas, Detroit, Los Angeles, Orange County, Phoenix, Sacramento and San Francisco, showed year-over-year declines of a record 16 percent or higher.

Nm_home_sales_080729_main No doubt, with the number of U.S. home foreclosures skyrocketing over 120 percent within just the last year, the average price of those homes is following suit. But in the opposite direction.

While that's bad news for homeowners, for those looking to buy a home today, especially a foreclosed home, the timing could not be better.

We found bargain basement prices across the country. And they are falling at record speeds. According to Dr. Paul Bishop, research director at the National Association of Realtors, "One thing that is really unprecedented is the speed at which the prices have fallen in these markets. It hasn't been slow and painful, it has been quick and painful.”

Bishop goes on to say that “It really is a buyer’s market out there, there are roughly a dozen markets out of 110 we track where median prices are under $100,000 and another 17 or so markets where median prices are between $100,000 and $120,000."

A startling figure, given that the current national average price of a single family home is $215,000. So if the average home is losing value, what does that say about the value of a foreclosed home? The answer, we found, is pretty shocking.

In Cleveland, a 3-bedroom, 2-bath multi-level home that had an estimated value of $112,692 can be yours today for just under $40,000. In South Carolina, a brand-new, 2,000+ square-foot home sitting on an oversized lot was previously valued at $125,000. It's currently priced at $50,000. But why stop at $50,000? In Louisville, Ky., $28,000 will get you a 4-bedroom single-family home -- where the average list price is nearly $170,000.

But perhaps some of the best deals for home buyers today can be found in the Motor City. Detroit is home to a whopping 1,754 properties currently on the market for under $10,000.

A 3-bedroom bungalow with a 2-car garage is on the market for $6,500. New windows and kitchen cabinets included.

According to local Detroit realtor Carl Williams, "You can't beat the buys here. We're standing in front of a house that two years ago went for $90,000 to $120,000. Now it’s on sale for $6,900." That home is located in a middle-class neighborhood and experts say that when the market goes back up, so will the value.

So therein lies the $64,000 question. When will the housing market rebound? The answers vary from soon, to not so soon. But when even bearish investors suspect that there's only another 5 percent drop in home prices to go, one has to believe that there is a light at the end of this dark, deep and painful subprime tunnel after all. As for now, if you can stand the risk, and have the credit and cash, then investing in a foreclosed home has never been such a steal. As Bishop says, "While it is painful for sellers it is a good opportunity for buyers who are in the market to get a good deal."

July 29, 2008 | Permalink | User Comments (20)

User Comments

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I know several people that have bought houses recently, there are deals out there for the people that kept their stuff together!

Posted by: david | Jul 29, 2008 1:53:02 PM

When you take emotion out of a real estate transaction, the dollar amount falls by 20 percent right out of the gate. Finding good deals is all about eliminating emotion as a buyer and finding selling situations that are also void of emos.

Posted by: Zinglesloff | Jul 29, 2008 1:54:17 PM

Just bought a house 30 miles outside of DC that was foreclosure. Bank had a mortgage on it last year of $535, I bought it for under $350 and the bank ended up with a check for $300K after fees were deducted. If you look, you can find deals but you have to be prepared to walk away.

Posted by: dmd | Jul 29, 2008 2:09:59 PM

You couldn't pay me to live in Detroit. That place is Murder City. I'm shocked that there aren't more cheap houses in there. Remember, kids: location, location, location.

Posted by: Larry | Jul 29, 2008 2:10:28 PM

housing deals

Posted by: kathy strait | Jul 29, 2008 2:10:37 PM

It's a buyer's market but most will let it slip through their fingers.

Posted by: A | Jul 29, 2008 2:12:41 PM

Location, location, location.

Most people will miss out on deals because by the time anyone realizes the bottom has been reached it will already have been on its way back up.

Posted by: Rick | Jul 29, 2008 2:38:22 PM

Could anyone tells me where I could get listings from other major cities, any web site? Thanks
jaoj@earthlink.net

Posted by: Joe Jao | Jul 29, 2008 3:08:40 PM

Where can I find out about the houses in Ky.
My husband and I are interested in purchaseing. I didn't see a link./

Posted by: carolyn | Jul 29, 2008 3:47:28 PM

While your summary of this report is generally accurate, I question including San Francisco in this group of deflating cities.
If you include the greater San Francisco Bay area in the statistics, there is some validity to the story. San Francisco County/City and Marin County are two outstanding exceptions to the national deflation. I helped my daughter buy a home in a San Francisco neighborhood a year and a half ago. Since then the homes in that neighborhood are increasing in price, not deflating.

Posted by: Handydan | Jul 29, 2008 4:00:12 PM

Peter Schiff has forecasted this for quite some time, and he predicts they will reduce much more. Too bad there are not enough buyers.

Posted by: Ben Straub | Jul 29, 2008 4:14:33 PM

When a $90,000 house in a middle class neighborhood is selling for $6900, it seems to me something must be terribly wrong or someone is getting terribly cheated because of some legal loophole. For almost anyone renting for a family, 20% down isn't much more than their monthly rent, so why is it going so cheap?

Posted by: Mickey | Jul 29, 2008 5:27:51 PM

In 1981 my husband and I bought a house for $106,000.When his job was transfered to new city in 1985...our house could only bring $75,00 We lost $31,00 There are plenty of vulters out there...waiting ready to scoup in for the dead bodies.We have never recovered from this.

Posted by: orange cat | Jul 29, 2008 7:51:59 PM

Many of the homes sales are 'QUICK SALES.'

The homes price have been reduced BELOW what is owed on the Mortgage.

If the lender 'FORGIVES' and that is a big *'IF'*, then the home owner will have to claim that amount still owed on their income taxes for that year.

Plus, reducing the price of the homes being sold for quick sale also DROPS the home values of all the homes in that community. Also it drops the value of homes in the surrounding communities as it is doing just that where I live.

Many of our homes in our communities have dropped below what we are paying on our mortgage. Some of our homes have dropped as much as $100,000.00 to $200,000.00 below what we owe.

Now it is getting harder and harder to hold on to our homes as our neighborhoods are feeling the change on how our own banks and other businesses treat us in our communities.

My bank held my husband paycheck for 8 days when I deposited his paycheck into our checking account to pay bills.

Now that is just WRONG!

Posted by: lovinggrandma53 | Jul 29, 2008 8:16:40 PM

I would like to receive listings from various major cities. Please let me know where to find info. Thanks.

Posted by: judith gibson | Jul 29, 2008 8:48:43 PM

My husband and I saw the news yesterday morning... and we are first time home buyers... well at least now we have the opportunity to be, we would like to recieve listings from various cities. If you could let us know where we can find the information, we'd appreciate it. Thanks...

Posted by: Priscilla Hakeem | Jul 30, 2008 10:59:48 AM

This is why we NEED Obama in the Whitehouse!

Posted by: jitters | Jul 30, 2008 11:58:19 AM

Being a mortgage broker for 28 yrs. in Ca. I sat out the sub-prime mess & just helped 1st x buyers use FHA& VA mtgs. There are lots of great prices out there but good luck getting financed w/o GOOD credit & at least 3.5% down pymt. That's why prices are dropping sooo much-there aren't a lot of people who can qualify!!! Pres. BUSH just signed Mtg. bill that took away down pymt. assistance for 1st x buyers who would qualify for a pymt. that would be the sane as their rent!! That will NOT help a recovery in this market!!
Also,If you want to buy out of state you need 25% down & great credit unless you move there w/ a job in place. Good luck everybody, the FEDS let their buddys make $( Mtg. bonds) while we all pay the price!!

Posted by: mbaesel | Jul 30, 2008 9:41:46 PM

2nd great depression soon prepare or perish

Posted by: hedge fund king | Aug 11, 2008 2:25:45 AM


How are house prices in Hawaii ?
I understand many buyers from SE Asia are piling in there already. Thanks

Posted by: g.coops | Aug 28, 2008 10:33:49 AM

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