Us 'foreclosure hell' hits home

50 percent of home sales in California come from foreclosed houses, according to new figures from RealityTrac…

The continued downward trend in the US is putting additional pressure on home prices, and is most notable in Nevada, Colorado, Tennessee and Michigan, but is also evident in Ohio, Georgia, Florida and Arizona, according to an Associated Press comparison of 2007 sales and foreclosure data. In Nevada, for example, 17.5 percent of home sales were from foreclosures, more than quadruple the number in 2006.

The growing proportion of foreclosure sales is both a symptom and cause of worsening conditions in the weakest housing markets, real estate experts say. Homeowners who aren't on a deadline to sell are yanking their properties off the market, and this means the remaining inventory is increasingly held by banks eager to unload foreclosed properties at fire-sale prices rather than carry the costs on their books.

Property values suffering

Property values and local tax revenues are suffering as a result, consumer advocates say, especially in neighborhoods with lots of minority residents for whom lending standards were weakest.

"There is a real complacency, or an under-appreciation of how bad this is," said Ramsey Su, an investor and former real estate broker in San Diego who regularly combs through the local sales database to asses the impact of foreclosure sales.

Reacting to such concerns, the Bush Administration and lenders including Bank of America Corp. and Citigroup Inc. unveiled a plan Tuesday to give seriously delinquent borrowers a 30-day break from foreclosure while lenders try to work out a way to make the mortgage more affordable.