While national home prices have fallen again to a level that has not been seen since 2002, there is evidence that the situation may have hit rock bottom and is creeping back upwards for some areas of the country.

According to The Standard & Poor’s/Case-Shiller National Home Price index, home prices have fallen 19.1 percent in the first quarter compared to last year, 32.2 percent compared to their peak in 2006. The drop from last year to today represents the largest drop in the history of the index.

Image: Flickr

Home prices vary remarkably from city to city depending on the local economy, foreclosure activity, and affordability. For some markets, the situation has gotten as bad as it is going to get, while others have not even come close to the bottom. Nationally, however, home prices are expected to creep downward for the rest of the year.

The median price of a home in Southern California is $247,000, a staggering 36 percent drop from last April, when the median price was $385,000. Foreclosures have resulted for more than half of all sales, with 54 percent of all previously owned and resold properties the product of foreclosure.

Sales, on the other hand, have risen 31 percent from last year, which analysts have attributed to a decline in median price that does not accurately reflect the decline in value of the homes. Foreclosure discounts have pushed home prices beneath the actual value of the homes themselves and these properties are the fastest to sell.

Absentee buyers, a group which mainly includes investors, account for about 19 percent of Southern California real estate transactions in April. The situation in Southern California is ideal for those who can afford to purchase a property and sit on it until the market recovers and the homes regain their value.

Sign of the Time (Image: Flickr)

According to a recent report, foreclosures in the United States were significantly up for the month of March. With more and more people having the means to make ends meet combined with the struggles of the banking industry, the result is an astonishingly high number of foreclosures.

Foreclosure Sign (Image: Flickr)

From February to March, foreclosures were up 17%. Comparing March 2009 to March 2008, foreclosures are up nearly 50%. In the first quarter of 2009, the report indicates that foreclosures are up almost 25%.

Foreclosures are an epidemic that President Barack Obama has targeted to try to get under control. He has talked about a plan that would help up to 9 million people with mortgages avoid foreclosures. The White House appears to be prepared to spend tens of billions of dollars to try to slow down this trend.

According to most experts, things would get a lot worse before they got better within any type of plan to help both the borrowers and the lenders. Banks are just now becoming more aggressive in going after those who have defaulted on their loans.

One of the concerns that many homeowners have is how to stop foreclosure. In some real estate markets, however, this may not be much of an issue. In some of the hardest hit areas of the country, banks are declining to take foreclosures.

Banks, loan servicers and others are taking a complete loss and walking away. It’s the latest development in the ongoing mortgage market crisis saga. Homeowners aren’t the only people deciding that it is more financially feasible to just walk away than to try and salvage the property; banks are deciding the same thing now. And that can cause more trouble for already-troubled homeowners.

The New York Times reports on this growing trend amongst mortgage lenders:

Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, said some properties had become such liabilities for investors that it was not even worth holding on to them to strip valuable fixtures, like kitchen appliances, toilets and hardware.

“The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.”

Most of the real estate that banks are walking away from, however, are properties at the bottom of the market. These are homes that were not worth a great deal to the banks at the outset of the mortgage loans –  homes in the $50,000 to $160,000 range before the housing market crisis hit.

It’s a new twist, and one that could result in confusion and even bigger hassles for homeowners. Many homeowners assume that once foreclosure proceedings start, things are over if they can’t make up the back payments. However, if the bank walks away without letting the homeowner know, he or she could be surprised down the road with more paperwork, expenses and hassles. After all, if the bank refuses to take over the title, you are required to maintain the property — even if you aren’t sure what is going on.

image source: Brendel via Wikipedia

On Friday, Fannie Mae announced they are extending the suspension of all eviction proceeding through March 31, 2009. The company is implementing the Home Affordable Refinance and Home Affordable Modification initiatives as part of the Obama Administration’s Making Home Affordable program, thus causing the extension.

Home Foreclosure - Image: Flickr

Additionally, Fannie Mae has created special foreclosure sale requirement in response to the Making Home Affordable program.

At financialstability.gov, you can learn more about the Home Affordable Refinance and Home Affordable Modification options. On the website, you can use their self-assessment tools to find out if you are eligible for the initiatives.

Also on the government website, there are some great tips on avoiding foreclosure rescue scams. Unfortunately, there are some scams out there preying victim on the desperate.

A sign of good fiscal health is if you’re paying less than 30 percent of your monthly income on your housing costs.

BusinessWeek recently ran an interesting story about homeowners who are paying a whopping 50 percent — or more — of their monthly incomes on mortgage and other housing payments. You can read the story here.

The BusinessWeek writers interview a homeowner who only eats out on certain days of the week, days of the week when McDonald’s offers 49-cent hamburgers. You might argue that such a homeowner — who is facing near certain foreclosure of his residence — shouldn’t be eating out at all. But when life’s such a struggle, why begrudge someone a 49-cent hamburger?

To see so much of your income gobbled up automatically each month must be extremely painful. I don’t know who’s at fault when a homeowner is saddled with mortgage payments that are far too high for them. I suspect it’s a bit of everybody involved in the real estate transaction: the borrower, the mortgage lender and the real estate agent.

There was a time when people relied on their home’s appreciation to get them out of such dilemmas. They figure their home’s value would rise fast enough to allow them to make a quick refinance of their mortgage loan. I remember back during the housing boom seeing homeowners refinance their mortgage loans less than three months after they moved into their new residences.

That’s not happening today. Today, if you’re buying a house you have to be fiscally responsible. In fact, as you look at the financial mess sweeping the country, it looks like we’re all going to have to learn to leave within our means again. The days of the housing industry providing everyone with artificial wealth are over.

The residential real estate slump has brought much misery, to be certain. But it’s also exposed some real creativity on the part of homesellers desperate to unload residences nearing foreclosure.

The latest bit of creative genius that I’ve discovered comes by way of The New York Times, which details the story of a couple who, unable to sell a home that was nearing foreclosure, held a raffle to get the home off their hands. Yes, a raffle.

You can read the story here.

The couple solf raffle tickets for $100 apiece, with the lucky lottery winner guaranteed their old farmhouse — which the couple had been unable to sell. The hope was that the couple, with the marketing help of a local real estate agent, would be able to sell enough raffle tickets to cover the cost of the house.

Strange thing is, the plan worked beautifully. The couple sold almost 6,500 tickets. The proceeds from the sale not only covered the cost of the couple’s mortgage, but left them with $200,000 extra, that they promptly donated to charity.

Amazing stuff. I don’t know if this exactly qualifies as “good news.” But in today’s troubled real estate market, you take what you can get.

The New York Times — still the best newspaper in the country, by a mile — ran an interesting story the other day. Election officials and voting-rights groups are worried that many of the millions of U.S. homeowners who lost their residences to foreclosure will also lose their chance to vote in the upcoming presidential election.

You can read the story here.  It’s yet another example of how the housing mess has impacted so much of life in the United States.

Basically, a large number of foreclosure victims failed to tell their election board of their new address.  This is understandable: When you’re losing your home, your thoughts tend to focus first on your family’s wellbeing and your overall financial health.

Here’s my hope: Democrats and Republicans work together to make sure everyone — even those who’ve gotten lost in the shuffle as they’ve battled foreclosure — gets the right to work. What I fear will happen is that this, as everything seems to do in this country lately, will turn into a Democrats vs. Republicans issue. Let’s be honest, a majority of the people who’ve lost their homes are probably leaning toward voting Democratic. (Notice I said “majority.” I’m sure there are many, many exceptions.) Let’s hope there isn’t an effort to keep these voters silent in an extremely close presidential race.

The residential real estate slump has claimed several victims. None may be as visible, though, as the unfinished new-construction homes that dot the country.

Crain’s Chicago Business , one of the top business publications around, recently wrote a small story about the high number of new-construction homes that have yet to be finished. Crain’s refers to them as white elephants.

What usually happens is that developers or homeowners run out of money before they can finish construction.

Crain’s profiles a Chicago couple who own a former farmhouse that sits on two-and-a-half city lots. After a small fire, the owners moved out, and have left the house vacant for the last 25 years. The owners, however, did decide to add an addition to the house. Unfortunately, they never finished it. The four-bedroom house — unfinished and all — is sitting on the market now for $2.5 million.

You can bet that house is going to be a tough sell. It’s a struggle to sell any home these days. One that’s unfinished? That’s a challenge for the top real estate agents.

According to the U.S. Census Bureau, there are a record number of homes sitting vacant.

This is bad news for neighborhoods.

The Chicago Tribune recently ran a story on the front page of its business section taking a look at the problems that vacant homes cause neighborhoods. You can read the story here. Basically, vacant homes have a tendency to look, well, abandoned, with weeds sprouting everywhere, broken windows and other problems. They’re a burden on the rest of the neighborhood, and an eyesore.

And vacant homes are plentiful, too. According to the Census Bureau 18.6 million homes across the country were sitting unoccupied during the second quarter of the year. That’s a new record. The number of vacant dwellings was up 6.9 percent from the same period last year.

It’s little surprise that the number of vacants has increased so sharply. Foreclosures are still skyrocketing. People are losing their homes. Others are abandoning them when the monthly mortgage bills become too overwhelming.

It’s a sad state of affairs. And one, unfortunately, that doesn’t look to be improving any time soon.