New home sales down, foreclosures rising

RICHMOND, VA (WWBT) - Sales of new homes fell to a six-month low in August. The fourth straight monthly decline during the peak buying season suggests the housing market is years away from a recovery.

Looking to buy a house? It's going to be your market for a while. Looking to sell? Not so much.

"You're not going to be able in most areas to sell it for what you would have for 2 to 3 years ago, possibly even a year ago," said Laura Lafayette, CEO of the Richmond Association of Realtors.

Realty Trac reports nationally all homes sales are down. It found foreclosures are up about 7%. Though locally, Lafayette says home sales are bucking that trend, up about 1.5%.

"When you consider that last year there was a tax credit incentivizing people to buy, and that doesn't exist this year, for us to be up in 2011 over 2010 is a sign that the market is healthier than people feel like it is," she said.

But local foreclosures are rising too, though not as much as Brian Liggan expected. His company, Virginia Capital Realty, sells foreclosed homes.

"Lots of banks have had self-imposed moratoriums. I think it's going to be a controlled response once the foreclosures start coming back into the market. They're not going to inundate the market," he said.

New home sales are down nationwide, but existing homes sales are up more than 7%. That's because people are snapping up foreclosed homes.

"The market is really good for buyers. Prices have been the best they've been in years. Interest rates are the lowest they've been in years," said Liggan.

And Lafayette says if you sell your home but upgrade to a more expensive home, you could come out ahead. Say you sell a $200,000 house for $20,000 less. If you buy a $500,000 house for $50,000 less, you're ahead $30,000.

"I may not get what I want on my house. But I'm going to get such a good deal on the house that I'm going to buy, I'm going to make it all worth while," she added.

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