Great News!! Foreclosure filings across the US are down by 8% as compared with last month!

What does this mean according to the news.... "Are we heading for a slow recovery or does this just reflect a dip in the foreclosures?" Foreclosures across the US are not less however in the longrun, as compared to last year, there are nearly twice as many as September 2006.

This drop as compared to last month is much better news then the reporters will or can allow themselves to report. For some reason the news reporters have a hard time reporting or even forecasting anything positive. But that's another story! Anyway, this is a sign that the economy has reached bottom, and that it is stabilizing. This is good news for anyone with an investment in Real Estate. Foreclosures have an effect on the market of lowering home values.

This happens for a variety of reasons, but to explain it easily, banks are not in the business of owning homes! They are in the money lending business. They really don't want to own homes. They want to dump them as quickly as possible, time is money. This means that they take what they can get and move on.

Typically, once a home has been foreclosed upon the home is not in great shape. The prior owners probably knew for a while that they could not afford their home, so sometimes they sell the components of the home to get money (kitchen cabinets, toilets, etc.). Sometimes they just don't take care of the home because they know that they are not going to be there much longer, so they don't care. This leaves the home in disrepair and causes the bank to take less then the market would bear for similar homes that were in good shape. If there are a lot of these homes selling at lower prices, this bring down the value of the better quality home. It is like a snowball effect. And the more foreclosures happen the larger the snowball, and the faster it rolls towards the bottom. And the overall effect the faster the prices drop.

So, this IS good news! We as homeowners want the rate of foreclosures to be less!