span when there is a surplus of class="cap">T he anything? Prices go down and that U.S. housing market is in a holds true for foreclosed homes. world of hurt. Bank owned homes Some lenders are cutting prices (REOs) exploded to three-quarter as often as every 20 days on of a million in the month of their REOs.
July, 2008.
The book value of one to For real estate investors, four-family homes owned by watching the number of lenders whose deposits are foreclosures grow generates insured by the Federal Deposit emotions much like those Insurance Corp. more than doubled experienced while attending a to $8.56 billion at the end of slasher movie. The number of the first quarter from $3.59 homes taken through bank billion a year earlier.
foreclosures is up 184% from a
Investor should understand year ago. Yes, a higher that this ocean of vacant homes proportion of properties that is driving down prices in many enter the foreclosure process are areas. Banks tend to cut prices ending up repossessed by faster than other sellers. That lenders.
undercuts the value of every home
If anyone tries to tell you in the area. What you buy today that the worst of the housing may seem like a bargain, but crisis is over point out that remember lenders will continue default notices are up 53% and dumping tens of thousands of notices of foreclosure auctions homes for months to come. That is up 11%.
will reduce the value of your
Lenders now own over 750,000 bargain home.
homes and the number is climbing.
Those owning homes today are They don't want those homes, they also suffering. Many bought at want to sell them. What happens the peak of the real estate price
bubble and have been underwater rent concessions are near record every since. With falling home highs. values their situation grows
Renters can lease a home for worse every day. What little the same price as a 990 sq ft equity they had vanished some apartment. That's tough time ago. That will result in competition for apartment more owners walking away from owners.
there homes and another increase
To make matters worse is the in foreclosures and REOs.
number of condo conversions that
Rents Crash
have been converting back into
The bad news continues. With rentals. More rental units coming hundreds of thousands of on a distressed markets means homeowners losing their homes continued downward pressure on through foreclosure the rental residential rents.
market has been flooded with
Oh sure, all of these problems potential tenants. That should be will be overcome with time. If good for apartment owners, right? you are a real estate investor That seems logical until you there are big profits ahead, but remember the tens of thousands of keep a tight hold on your buying vacant homes that can't find power until there is not the buyers.
slightest doubt that the housing
Landlords are desperate to market has hit a real bottom and rent their homes to raise cash is starting up the other that can be applied to mortgage side.
payments. With so many homes
Keep This In Mind...
offered for rent they are asking
In November of 2002 an event for almost anything they can get. was held to honor economist For apartments rent growth has Milton Friedman on his ninetieth flattened, vacancies in many birthday.
areas are at record highs and
Then Federal Reserve Governor
Ben S. Bernanke (now Fed head) Walters is a third generation gave a talk. Here are the last real estate investor and founder lines of that speech… of
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