Falling foreclosed property prices in the Tristate have been cutting down home appraisal values and have been hindering some mortgage loan applications.
While the low level of foreclosed property prices in the Tristate have been attracting large numbers of investors and first-time home buyers who have cash to spend, the lower home appraisals have been a barrier to some buyers who could not qualify for the loan-to-value ratios required by the lenders.
One homeowner in West Chester has been selling her house for $107,000, but the buyer who is ready with an FHA loan could not complete the purchase because the home appraisal was only $80,000. The seller said the appraisal is $8,000 lower than her current mortgage loan and $3,000 lower than the tax appraisal conducted by a Butler County assessor in 2008.
The appraiser said he based his appraisal on recent house sales in the area, which have been sold at foreclosed property price levels.
Another homeowner in Butler County has been selling his home for $105,000, but another house, about the same in size and look just several doors away, is being sold at $70,000. So it can be assumed that the $105,000-priced house will take a longer time to sell, especially if there are many foreclosed property units nearby priced at around $70,000.
Another homeowner in West Chester has found a buyer for his home listed at $126,000, but the buyer could not carry out the purchase because the home appraisal was only $100,000. The buyer said he is still trying to find some ways to come up with the $26,000 needed to cover the gap.
Large foreclosed property inventories have pushed down the prices of homes in many states. In April, home prices went down by more than 18 percent, based on the Standard & Poor’s/Case-Shiller 20-City Home Price Index released this week.
A top Barclays Capital economist had predicted home prices to go down further by a staggering 40 percent next year. A private equity fund executive claimed that hundreds of thousands of bank owned repossessed properties will be released to the market in the coming months. These factors will push down further home prices nationwide.
In May, Ohio was tenth among states with the biggest foreclosure rates. One house in every 446 housing units in the state was hit with a foreclosure action. Out of 11,360 homes which received foreclosure filings, more than 4,000 units were already scheduled for foreclosure sales while more than 3,000 units were already in foreclosed property listings.
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