US Home Prices See Historic Drop in First Quarter

The median price of homes fell 14% in the first quarter to $169,000, according to the National Association of Realtors (NAR). Prices in 134 of 152 metropolitan areas saw declines, and the most notable came from the San Francisco and San Jose areas in California, as well as Cape Coral and Fort Myers in Florida. US home prices have dropped the most on record for any quarter.

Distressed and Foreclosure Sales

Distressed sales and bank seized homes led the way in sales, largely dominated by the Florida and California markets. Distressed sales increased buying in 17 states, as investors and first-time homebuyers entered the market due to opportunities in lower priced housing. The available inventory of previously owned homes dropped from 3.8 million to 3.7 million (NAR), and the number of new homes for sale dropped to 311,000, the lowest number since 2002 (Commerce Department). Existing home sales fell by 6.8% from the previous year, and 3.2% from the previous quarter.

Largest Real Estate Sales Gains

Here are the largest sales gain by state from the previous year:

• Nevada +117%
• California +81%
• Arizona +50%
• Florida +25%

The states however, also experienced the highest foreclosure rates for the entire country and continue to be a drag on the national housing market.

Source: Market Watch

US mortgage rates continued to stay low, with the average mortgage rate at 4.84% last week, down from last year’s 6.05%. The rate saw a record 4.78% low in April.

US Banks Lose Big

According to the Federal Deposit Insurance Corp. (FDIC), US banks repossessed $26.6 billion worth of real estate at the end of 2008, which is double the previous year. The banking industry continues to be hit hard by losses resulting from real estate investments and related assets, losing $26.2 billion in the fourth quarter of 2008 alone. This is the largest loss ever recorded by the FDIC.

With the end of the recession predicted for the last quarter this year as signs of recovery start to show, is now the perfect time to buy, or are you holding out for a further drop?