There are still plenty of distressed homes and foreclosures in America. Moreover, the second half of 2014 appears to be ripe with these opportunities for those who know where to look for them.
Despite media reports of inventory shrinking, tough competition, and declining national foreclosure rates, other statistics suggest distressed situations and inventory is booming in some areas. So where are the opportunities? How big are they, and who should be buying foreclosures? What other ways are there to find good deals on houses and investment properties besides these distressed properties and REOs?
Finding Real Estate Deals in a Foreclosure Vacuum
Shriveling inventory levels, and a lack of foreclosures have scared some real estate investors, hopeful homebuyers that haven’t acted yet, and some real estate agents whose clients have heavily relied on the recent state of the market. Many have been incredibly spoiled over the last nine years. There have been so many desperate sellers, it has been an all you can eat buffet for buyers looking for cheap property bargains. The return to a normal market has some newbies terrified, as they have never worked in these types of conditions.
Experienced real estate professionals know there is little to fear. In fact, quite the opposite is true. Low priced property is great, but it means little without high demand, and the upward momentum of a rising market. Wholesaling and value-add house flipping works in all market cycles. It often works even better in hot markets.
How Big is the Distressed Property Marketplace in Q3 2014?
According to the data, there are still more than 9 million US homes underwater (owing more than their values). This signals significant potential for short sales. There are also still millions of vacant homes – far more than the number of homeless in America. These properties need to be recycled and utilized.
While national foreclosure statistics might be skewed by some of the best performing markets, there are still far more properties in default than most imagine. The top five U.S. states for foreclosures in 2014 remains: MD, NJ, IL, NV, and FL. According to the LV Review Journal; Nevada, which was number five on the list for foreclosure rate in the first six months of the year, has one out of every 136 homes in default. This shows far more density than other statistics have revealed in the past. Yet, this pales in comparison to Florida – where one out of every 74 housing units are still in default. This doesn’t count all of those that have gone through the process in the last nine years, or those that are re-defaulting now and haven’t yet moved into the foreclosure phase. According to the U.S. Census Bureau, there were over nine million housing units in Florida as of 2013. That means thousands of homes in default, just in Florida.
Even though states like Nevada are still working with a backlog of over a year of foreclosures, new foreclosures continue to surge. RealtyTrac says NV foreclosure starts jumped 66% in June 2014. Michigan, Ohio, and New York all have plenty of foreclosures and distressed properties of their own.
Opportunity in the 2014 Real Estate Market
Despite one report of pending home sales declining in the summer, many markets like Atlanta are seeing new contracts and demand rising steadily. The motivation to buy ahead of rising prices and interest rates is great, and those that can buy desperately want to do so, and fast.
New and returning home loan programs including 100% financing, stated income home loans, hard money mortgage loans, and buy-to-rent loans for investors, as well as an array of housing assistance down payment, closing cost and home improvement programs are helping to fuel this desire for those that are willing to seek them out.
Clearly there are still endless distressed properties and foreclosures available for real estate investors to take advantage of. These wholesale properties can be great buys for making a profit and getting a deal on a new residence. However, they also provide even more opportunity for helping the nation, building up communities, and aiding other individuals.
Still, there are many other ways to buy besides bank owned REOs, and foreclosures. Real estate wholesalers hold the keys to many of these homes. Turnkey property investment firms have even more. Big private equity backed investment firms are getting around to selling off the inventory they accumulated at the beginning of the crisis, and others can find opportunity in building new homes or all types, as well as renovating and re-purposing existing property.
Don’t let well intentioned, but flawed media hype derail your goals of homeownership and higher incomes and wealth building through real estate. For those willing to do a little homework, properties and financing are readily available to take advantage of in today’s market.