Newtown Real Estate Prices Continue To Drop While Inventory Swells

By John Voket

Newtown currently has more than a year’s worth of housing stock on the market even though prices have dropped almost ten percent on average from the same period in 2006. One website that tracks the industry is reporting more than half of those available homes may be currently in or about to go into foreclosure.

Across the country, the number of foreclosure filings reported last month more than doubled versus August 2006 and jumped 36 percent from July, a trend that signals many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid a national housing slump.

Nationally, a total of 243,947 foreclosure filings were reported in August, up 115 percent from 113,300 in the same month a year ago, Irvine, Calif.-based RealtyTrac Inc said this week.

There were 179,599 foreclosure filings reported in July. The site reported September 18 that there were 212 Newtown homes affected, 42 in pre-foreclosure, 11 bank-owned properties, 9 newly built homes, 3 for sale by owner, and 147 resale homes.

Some properties might have received more than one notice if the owners have multiple mortgages. And according to the team of Robert and Richelle Ward at Prudential Connecticut Realty on Church Hill Road, the website lags in correcting numbers as individuals move out of foreclosure danger.

Mr Ward would not speculate how accurate the RealtyTrac numbers might be, but the town clerk’s office has recorded approximately 78 final foreclosure actions since January 2007.

That may mean affected property owners have either sold or made alternate arrangements with their mortgage holders prior to the foreclosure threat becoming final in most of the cases RealtyTrac is reporting, Mr Ward ventured.

On the market side, Ms Ward confirmed that as of September 18 there were 21 Newtown homes for sale at $300,000 or less; 104 listed between $310,000 and $500,000; 143 between $501,000 and $1 million; and 43 selling for $1 million and more.

Mr Ward said among the more expensive homes, a majority are newly built houses being marketed by builders. Those properties may be more challenging to sell, he explained, because the builder has less wiggle room to negotiate on price.

“Someone selling a million-dollar home who has owned it for 20 years has a lot more flexibility than a builder with a brand-new million-dollar home.

August’s RealtyTrac total represents the highest number of foreclosure filings reported in a single month since the company began tracking monthly filings two years ago. The national foreclosure rate last month was one filing for every 510 households, the company said.

“The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now,” RealtyTrac Chief Executive James J. Saccacio said.

The mortgage industry has been rocked by a surge in defaults, particularly among borrowers with subprime loans and adjustable rate mortgages that initially had attractive “teaser” interest rates but then can adjust upward, resulting in a payment shock.

Many of the loans, some of which adjust in as little as two years, were issued in 2005 and 2006 during the height of the housing boom.

Lagging home sales and flat or decreasing home prices have also left homeowners unable to make their mortgage payments hard-pressed to find buyers. And in the case of sellers who must vacate due to job transfers or other pressing relocation circumstances, Mr Ward has seen a few come out of the closing upside down.

“If someone moved into town a year ago and bought a $500,000 home, and they have to settle for $450,000, once you figure realtor commissions, bank and closing fees, and other related expenses, they might be writing a check to walk away,” Mr Ward said. “It’s the rare exception, but I see it happening.”

The latest RealtyTrac figures are reflecting an increase in the number of homes going into foreclosure that are not being picked up in estate sales and are ending up going back to lenders. The number of bank repossessions jumped to 42,789 in August, compared with 20,116 a year earlier, the RealtyTrac said.

In July, there were 26,842 bank repossessions.

Nevada, California, and Florida had the highest foreclosure rates in the country last month, the firm said.

In Newtown, a comparison against the same period last year in the Multiple Listing Service shows while the number of homes sold between January and September increased slightly over last year, from 253 to 259, the average sale price was down almost ten percent.

While the average sales price in 2007 was $553,629, the same residential Newtown home sold for $623,152 in 2006.

There is some light on the horizon, however. The Wards are reporting that in recent weeks, Newtown home sales have picked up a bit.

“We’re hoping that trend continues for everyone’s sake,” Mr Ward said.

(Associated Press reports were used in this story.)