An underlying problem triggering foreclosure activity has been the erosion in home prices nationwide, although Albuquerque has done comparatively well in this measure of the housing slump. The price drop can lead to a situation where a homeowner is forced to sell his or her home because of a job loss, for example only to find the house is worth less in today’s market than the amount owed on the mortgage. In some cases, the homeowner can’t refinance the house to bring down the monthly mortgage payments because there’s not sufficient collateral.
Underwriting has gotten stricter and stiffer, but how can you foresee someone is going to lose their job? With the economy the way it is, a lot of people are one car accident or broken refrigerator away from foreclosure!
The median sales price of an existing single-family home in the metro area dropped by more than 10% from $198,500 in 2007 to $177,900 in the second quarter of 2010, according to the National Association of Realtors. For comparison, the drop in the median price was 19% nation wide and 36% in the hard hit western states over the same period.
If there’s a silver lining to the dark cloud of dropping home prices, we’re definitely getting more affordable.