Appreciation Rates Foreshadow Foreclosures
Third-quarter house price appreciation figures released last week by the Office of Federal Housing Enterprise Oversight
provide more evidence of a cooling real estate market and further foreshadowing of a continued rise in foreclosures — all pointing to more opportunities for real estate investors to buy low.
The OFHEO report shows national house prices rose 7.73 percent from the third quarter of 2005, down from a 10.06 percent increase in the second quarter and down from a high of a 13.9 percent increase in the spring of 2004. Home prices rose just 1.3 percent from the previous quarter, the lowest quarterly increase since the second quarter of 1998.
Michigan home prices declined 0.6 percent from the third quarter of 2005, making Michigan the first state to report a year-over-year decline in more than six years.
Several of the states with the 10 lowest appreciation rates also posted foreclosure rates among the nation’s 10 highest in the third quarter, according to the RealtyTrac U.S. Foreclosure Market Report
. These states included Michigan, Ohio, Indiana and Colorado.
Massachusetts and Rhode Island both saw quarterly declines in home prices and also reported the two biggest percentage increases in foreclosure activity in the third quarter, further demonstrating the correlation between house price depreciation and rising foreclosures. New York and New Hampshire home prices also declined on a quarterly basis.