Finally, a bit of positive news comes out of the US property market, as the latest statistics released by RealtyTrac show that, for the first time in 40 months, foreclosures have fallen in April in comparison to last year.
However, before everyone heads over the Atlantic to buy vast reams of cheap real estate and wait for a speedy market recovery, it is important to look at the situation in context. Despite the two per cent annual decrease, just shy of 340,000 homes were issued with a default notice or repossessed over the course of the month. That equates to one in every 387 US housing units receiving a foreclosure filing during the month.
"There were two important milestones in the April numbers that show foreclosure activity
has begun to plateau - but at a very high level that will not drop off in the near future," explained James Saccacio, chief executive officer of RealtyTrac. Mr Saccacio was referring firstly to the fall in foreclosure activity and also to the fact that bank repossessions reached a monthly high. This is not quite such positive news for the market.
However, the housing market recovery has to begin at some point and news that fewer distressed properties are making their way on to the market could be viewed as a catalyst towards real estate resurgence
Earlier this year, property guru Warren Buffett predicted that recovery could take place "within a year or so" and a number of new statistics seem to suggest that the world's best investor could be right once again.
The US Commerce Department has recently announced that sales of newly built homes surged by 27 per cent during March, the single biggest monthly gain in almost 50 years. Added to this, the National Association of Realtors' report demonstrated that, out of 152 metropolitan areas, median price increases were seen in 92 regions - a considerable improvement from Q4 of 2009, when just 67 markets reported year-on-year price rises.
In addition, low interest rates are helping to encourage homeowners to the market and buyers looking at long-term mortgages have the potential of saving a great deal of money over the home loans' lifespan.
While recovery is still some way off from the heady levels witnessed before the slump, positive signs remain that suggest canny investors could profit from the current situation
- Tuesday 18 May 2010