Over the past few years the mortgage and property markets have been thrown into turmoil, and with many homeowners falling into financial difficulties leading to missed mortgage repayments a massive number of foreclosures has resulted across the country. This is not news to anyone in the real estate business. It is unfortunate, but a fact of life, that one person’s pain is another’s gain – foreclosures do represent a rare opportunity for investors and some future home owners.
With all of these foreclosures over the last couple of years, the housing market is saturated with listings, many at discounted prices. And some feel the market has already reached rock bottom where deflation of prices is concerned. For the investor then, right now may be the opportune time to take advantage of this “bargain economy” – but there are other factors to consider besides price. Some experts believe sunrise on a new vibrant real estate investment market may be on the horizon?
Recent surveys have indicated that the prices on foreclosures in some cities in the United States is far lower than in other cities, so the key to ensuring that your purchase is a real bargain is to make sure that you purchase in the right city at the right price. In one study a list of the cities that was offering the largest average discount on purchases of foreclosed properties was compiled. This revealed that Las Vegas, for one, had offerings which were not nearly the bargains they might have been because of bidding competition. Banks in Las Vegas tend to release foreclosures methodically in order to create bidding wars between investors – raising the prices of repos.
Conversely, there are regions and cities where bargains exist because of the lack of competition. It was discovered that discounts of up to 60 percent were prevalent in some cities such as Pittsburgh, where the average price was discounted 59 percent. As you can imagine, living on the Three Rivers never seemed so feasible when low price is the goal. Some other cities making the “best list” of bargain foreclosures included; Minneapolis, Denver, Cincinnati, and Columbus, all of which offered healthy discounts on foreclosed properties.
A last note on bargain foreclosures. For the investor, or the would-be home owner, buying in severely depressed markets is a gamble. Profiting in such markets can be a long drawn out affair with no guarantees. Of course the hardest hit markets can rebound the fastest too, but the instability is an obvious negative here. For certain types of properties though, price can be the best indicator of a true bargain. This is a subject for another report on high end properties. For markets where price will continue to fall, Forbes reported on Clear Capital’s market analysis showed Virginia Beach, New Haven, Tuscon, Dayton, and Jacksonville as the cities set to lower price dramatically in 2011.