Connecticut foreclosures and short sale is not the reason for our homes depreciating in value, it is the end result of bad policies, easy money and overbuilding of 5-10 years ago. 2003-2007 were times when builders got rich and investors got richer. Investors were gobbling up 2, 3 and 4 vacation homes and banks were lending money with no income verification. It was times when demand was high and supply was low and because of that, home prices were rising 1-2% per month and lasted for several years. In a matter of just 3 years, home prices increased 35-40 percent in our area and was outrageous. It became obvious that affordability was getting squeezed and investors were running out of buyers able to afford the outlandish prices for homes....and like a light switch, the market turned. The plateau came quite suddenly in 2007 and began to deteriorate quickly. Once appreciation stopped and depreciation set in, people were not able to refinance their homes. The glut of homes that were purchased with 3 and 5 year baloon payments were coming due and could not be refinanced since there was no equity in the home any longer. Owners were forced to sell at a loss. Couple that with financing a few wars, blowing through our national debt ceiling and unemployment hitting 10%, and we set the stage to a new supply vs. demand scenario where damand was now low and supply was extremely high. The cyclone and buying frenzie came to an end.
You see, Connecticut foreclosures and short sales on the market right now are not the problem to the falling equity in our homes. It's an end result of overbuilding and easy money that ran out of control. Distressed homes on the market today are being sold the same way conventional homes are sold. Through real estate agents to the highest bidder. The problem is there aren't very many bidders and far too many homes on the market and the extra competition is causing our prices to drop. We would have the same problem if none of the homes were distressed with the same ratio of supply vs. demand.
Don't blame the falling values on Connecticut foreclosures and short sales, the blame rests on the easy money of the mid 2000's. This area is starting to normalize prices back to inflationary levels over the last 10 years in a touch economic environment filled with high unemployment and underemployed Americans. Hang in there. There are signs we're approaching a bottom.
Overall, Connecticut foreclosures over the last 3 months ending in October 2011 are down, month over month. In August, 27% of all homes in preforeclosure (1432) were foreclosed on and in October, 32% of all homes in preforeclosure (872) were foreclosed on. What this means is that October had fewer homes entering into preforeclosure than did August and October had more foreclosures on a higher percentage of homes meaning more homes are moving through the process than are entering.
Now is good opportunity to search out Connecticut foreclosure and short sale homes and investment opportunity. As a buyer, you can purchase a home at prices 10 years ago. If you haven't considered being an investor before, now is a great time to dip your foot into the water. Low prices and low interest and a hot rental market make for good consideration. Also consider that you're eating away at the bloated supply of our market and helping get it back into balance. Want more info? Search here for Connecticut Foreclosures and click here for Connecticut short sales.
That's my .02... What's yours?