Homeowners are wise to keep abreast of home values in their local area and also nationwide. For most people their home is their single largest asset, and most homeowners have seen the value of that asset dip significantly downward in the past three years with that market value not likely having hit rock bottom yet.
A huge plus for home buyers or those who are refinancing mortgages is that home mortgage rates have dropped to historically low rates. A huge negative weighing down the real estate economy is that the inventory of foreclosed homes is growing. According to reports, when those homes are eventually unleashed on the market, housing prices will likely drop even further.
According to polling done by Rasmussen and reported on their website, Rasmussen Reports on Tuesday, October 12, 2010, “Homeowners have become even more pessimistic. Thirty-two percent (32%) expect the value of their home to fall over the coming year while just 21% expect to see an increase in value.”
If you are not buying, selling or refinancing a mortgage and you are able to meet any existing mortgage obligation on your home, the lowered valuation of your home may not be an immediate cause of concern. In fact, it may lead to at least a temporary reduction in your real estate taxes.
Other factors to consider
If you are trying to refinance your mortgage for whatever reason, you will likely not be able to do so if your mortgage exceeds the appraised value of your home. Or you might be able to refinance if the home value has dropped but you still maintain equity in the home, but you may not be able to obtain the most favorable interest rate that is being advertised.
Foreclosed property near your home may prove detrimental if the vacated property is no longer being maintained to the standards of other homes in the area. Some foreclosed property is trashed before it is vacated, and upkeep on the exterior of the home as well as lawn care is often neglected. Buyers of foreclosed property are forewarned to get a thorough appraisal of any foreclosed home before proceeding with making a purchase.
Condo and townhome owners may be adversely impacted by the foreclosure of other units. They may find themselves being assessed higher association fees to offset lowered revenue into the association budget when other property units within the association are vacated.
The home value index as reported on Zillow.com has dropped 3.8% nationwide in the twelve month period ending 10/05/10. Reports of home values as listed on that website show wide variations for metro areas with a 20% drop in home values shown for the Ocala, Florida metro area.
Zillow.com offers homeowners a way to get a quick “zestimate” of their home value or those of homes in the immediate area by clicking on the “homes” tab on zillow.com, typing in the home’s address in the search bar that appears below the tabs, and clicking “go.” The homeowner will get an aerial shot of their home if it isn’t too new for data to match up properly with that exact piece of property and if other data is available to correlate with the address. Details about property values are then available to the person making the data search.
In a Q&A on zillow.com, this is stated: “While a zestimate is not meant to be as accurate as an appraisal, or a broker price opinion (BPO), or a term most like to call and use, a comparative market analysis (CMA), it still can be a starting point… please DO NOT take this number too seriously.”
The issues of foreclosures and falling home prices are a major part of the economic crisis that is crippling the recovery of our nation. With unemployment remaining at just under 10% and the possibility of future inflation and government debt caused by large expenditures in the past two years on the horizon, solutions to these as well as other economic issues will not come easy. No matter which party is in the majority in Congress following the November elections, there will be much on the collective plates of all those holding office when the 112th Congress convenes in January, 2011.
Additional resources with information on the subject of foreclosure:
Officials Launch Foreclosure Investigation in 49 States
Home Sales Remain Dismal: Bring Back the Homebuyer Tax Credit
Foreclosure Mess Deepens, as Experts Fear that U.S. Has Yet to See the Bottom
Home prices to take hit next year in many markets
Nearly one in four second-quarter home sales a foreclosure