Housing News

The latest S&P/Case-Shiller national home price index came out this morning. To sum it up, the index found that the average home price in the nation's top 20 markets fell 15.4% in the past 12 months.

While such a drastic decrease is certain to give pause to any current or prospective homeowner, it's important to understand that home sales resulting from foreclosures and short sales are included in the index. Such sales are sold at heavily discounted prices, which naturally drag down the median price of homes sold.

That's why areas like Miami (-28.3%), Las Vegas (-28.6%) and Phoenix (-27.9%) are seeing the sharpest decreases... they're areas where short sales and foreclosures are most prevalent.

To give you an idea of how much such sales could drag down the overall home sales figure, RealtyTrac estimates that there will be at least 1.9 million homes that will be foreclosed this year. Not all will be sold, mind you, but a significant chunk will be -- along with homes foreclosed in 2007 & 2008 -- at a fraction of what they were purchased for. A friend of mine bought a condo in Pompano Beach, FL, in 2004 for $320,000 that he is now trying to short sell for $180,000. His mortgage company has given its approval because they'd rather get $180,000 than a lesser amount.

So while your heart might skip a beat after reading the headlines, keep in mind that there are factors that are drastically skewing the numbers. If you're a prospective home buyer and your family is interested in a neighborhood not hit by foreclosures and short sales, don't be afraid to take that important step towards home ownership.

http://www.forsalebyowner.com