Foreclosure Sales Rebound as Buyers Snap Up Deals

But prices drop drastically as lenders bite the bullet
By Kevin Spak,  Newser Staff
Posted May 27, 2008 7:31 AM CDT
A house is offered for sale at a lower price, Friday, May 23, 2008, in Cincinnati. Sales of existing homes fell for the eighth time in the past nine months.    (AP Photo/Al Behrman)
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(Newser) – April generally was not a great month for home sales, the Wall Street Journal reports—except in the areas hardest hit by the subprime crisis as lenders slash prices on foreclosed homes and buyers snap them up. Subprime-riddled Detroit, for example, has seen home sales rise 48% in the past four months over last year; but prices have dropped 56%.

Until now, banks had kept prices at unrealistic levels, hoping to avoid huge losses. But as their home inventories grew and clogged up the balance sheet, they’ve “moved into the acceptance mode,” said one housing economist. “I think this is the first good news for the market.” But housing isn’t in for a quick turnaround; inventories remain high, and foreclosures continue to exacerbate the glut.