Buying foreclosed property at a bargain is still doable in 2010 despite reports of price appreciation in several areas of the country.
According to Lawrence Yun, head economist of the National Association of Realtors, distressed sales and foreclosure sales will continue to rise and put downward pressure on home prices.
Based on data from various realtor associations, short sales and foreclosure sales accounted for one-third of total house sales in December. The distressed percentage is even much higher in certain areas such as Las Vegas and other cities clobbered by foreclosures and handyman specials.
In Las Vegas, foreclosure properties have been comprising an overwhelming 74 percent of total house sales and have been cutting down the prices of nondistressed homes by 23 percent. According to local analysts, the price pressure would have been heavier if banks have not been slowing down the release of units from their foreclosure inventories.
Las Vegas banks have been encouraging bidding wars to improve foreclosure prices by strategically rationing out their repossessed properties.
Other markets where flipping houses is possible are Cincinnati and Columbus in Ohio, Minneapolis and Saint Paul in Minnesota and in Denver, Colorado.
Buying foreclosed property at a big discount is also possible in Pittsburgh, where the rate of foreclosure is not as high as in other metro areas, but where banks release repossessed properties to the market as they take them back from auctions.
In Pittsburgh, foreclosure homes account for only ten percent of house sales, so banks sell them off at discounts of as much as 59 percent to remove them quickly from their books.
Housing analysts contend that the foreclosure problem would become more widespread this year because the major cause of financial difficulties is no longer toxic mortgage loans, but rapidly rising unemployment rates.
While before the foreclosure crisis is concentrated in neighborhoods where residents took out costly home loans, the unemployment problem is now driving foreclosures in areas where residents took out prime loans and in upscale neighborhoods where residents enjoy high incomes.
Even extremely affluent areas like the Hamptons on Long Island have been experiencing defaults and foreclosures – words never heard of on the island for decades.
Additionally, analysts contend that investors would account for a huge percentage of people buying foreclosed property in 2010 as many occupant buyers have already made their purchases last year and as mortgage lenders tighten their lending policies.
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