The Wall Street Journal reports in depth this morning on what anyone following at home probably realized was inevitable: a drop in home prices because of all the foreclosed homes on the market. Simply put, the new supply is driving down the costs to buyers. (Or, to put it in a twisted way: all those home sales of the last few years, the ones driven by adjustable-rate and subprime mortgages, caused many of the current sales.)
The oversupply is severe: In some major markets, including Las Vegas and San Diego, foreclosure-related sales have accounted for more than 40% of all sales in recent months.
On Monday, new data suggested that pressures like these are starting to drive prices low enough to attract some buyers back into the market. Sales of previously occupied homes jumped 2.9% in February from the month before, the National Association of Realtors said, the first increase since July.