According to a report today in the Houston Chronicle the foreclosure market is driving down the Houston home prices over the past month. According to the Houston Association of Realtors: one in three homes sold last month had previously been in foreclosure. The increase of foreclosure inventory contributed to the 8.5 percent drop the median price of a single-family home.

HAR reports falling prices for the fourth straight month, the price fell to $127,850 in January compared to $139,720 a year earlier. Foreclosure sales made up 34 percent of all single-family home sales during the month, compared to 25 percent a year ago.

There were 44,178 properties for sale on the Multiple Listing Service at the end of the month.  Demand for rental properties was up in January, too. As more Houstonians opted to rent, leases of single-family homes rose 4.8 percent and those of townhomes and condominiums were up 25.6 percent.

What does this mean to my clients and blog readers? Now is a great time to invest or purchase with home prices at the most affordable levels and interest rates lower than ever. President Barack Obama's $787 billion economic stimulus package would give eligible first-time home buyers an $8,000 tax credit that wouldn't have to be repaid unless the owner sells the home within three years.

My investors are buying foreclosures in Sugar Land that are absolute steals, and turning them into rental income property to take advantage of the current demand and prices. So they are purchasing homes below market value gaining instant equity, renting them out for income, and gaining equity appreciation. I'll follow up with another blog giving a typical scenario.