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In a conference of US Mayors, experts said that in last 16 years this is the worst housing downturn. They have estimated that during the next year this will lead to the decline of property value by $1.2 trillion and will cut down tax revenue by more than $6.6 billion.
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In a conference of US Mayors, experts said that in last 16 years this is the worst housing downturn. They have estimated that during the next year this will lead to the decline of property value by $1.2 trillion and will cut down tax revenue by more than $6.6 billion.
It was said that the California would suffer the hardest, as decrease in property value here will be around $630.6 billion. They also said that the New York City might face the utmost slowdown in the economic output because of the mortgage crisis.
The real estate market in United States, especially the residential subdivision is very uncertain as the prices are pushed down due to the increasing percentage of the foreclosures among the sub prime borrowers. The highest default rate is from the sub prime section. This has led to the record number of unsold homes.
In a recently released report on home sales by National Association of Realtors, it is very clear that the things are getting worse everyday. The report reveals the data of existing home sales in the month of October and it is actually a shocking one that shows the largest fall of existing home sales in last 8 years.
They said that during the last quarter home prices fell in one-third cities of the United States due to the strict lending process. This also caused decline in the nationwide home sales by 14 percent.
The October existing home sales including different types of houses were down 1.2 percent at a seasonally adjusted annual rate of 4.97 million units compared to the 5.03 million units of September 2007. The figures in October are 20.7 percent lower than the 6.27 million units that were sold in September 2006.
The seasonally adjusted annual rate of sales of new homes in October was at 728,000 units. This month there is a little increase of 1.7 percent above the revised September sales figure of 716,000 units. If we compare with the new homes’ sales figure of October 2006, then this is the sale is 23.6 percent lower than the 952,000 units of October 2006.
Experts believe that the 1.7 percent increase can barely be called as recovery; yet, there were few good signs in the report in the report. To start with, sales in all the regions except the West were positive enough compared to September with the longtime sufferer Midwest up by 14.3 percent month-over-month. Three of the four regions were still self-indulgent well below October 2006 figures but the Northeast, which had begun its downturn before the other provinces, was up by 43.6 percent when compared to the October 2006 sales.
Inventory was another positive sign in the report. During September there was a 9.0 month supply of new homes for sale nationally, a figure that had dropped to 8.5 months in October.
Experts believe that the fall in the value of the bonds backed by mortgages is the main culprit that has forced the US banks and financial institutions to take write downs more than $45 million and also tighten their lending standards. Falling home prices also created trouble in refinancing or selling the homes.