Investors Find Bargain Foreclosures to Their Liking in March

A big number of investors in the U.S. find bargain foreclosures to be the hottest investment in March 2011 as they take advantage of the low prices of these distressed properties. The high level of activities by investors propelled the nation's housing sales up during the month. However, purchase activities by first time and traditional buyers went down over the same period.

The nationwide trend was mirrored in various local markets. In Georgia, a lot of investors also purchased Lawrenceville foreclosure homes and distressed houses in various local markets of the state. At the country-wide level, sales of previously-owned houses increased to an adjusted rate of 5.1 million annually in March of this year, according to the National Association of Realtors. Compared with February 2011, the jump was around 3.7%.

According to housing market observers, majority of the Georgia foreclosure homes and distressed properties all around the U.S. that were purchased in March were grabbed by investors. Market observers also claimed that it is highly likely that most of these purchases were made by the bulk by private equity companies who mostly paid in cash. For March 2011, 40% of total housing sales were accounted for by short sales and foreclosures, while 35% of total sales transactions were closed using all-cash payment.

They also reported that most of these investors find bargain foreclosures in hard-hit areas such as Las Vegas, Tampa and Phoenix. Housing analysts also revealed that another sign that investors dominated housing sales transactions in March was the price range of homes that got purchased during the month. Housing reports showed that sales of houses priced below $100,000 rose by 10% from one year ago, signaling investors' move to take advantage of heavily-discounted prices.

They also stated that foreclosure bargains seemed to be the preferred property during the month as sales of houses ranging in price from $100,000 to $500,000 have gone down by 14% compared with one year ago. Meanwhile, sales to first time buyers went down by 33% during the month, way below the 40% that is considered healthy by housing market analysts. In terms of prices, the median selling rate of homes sold during the month was up to $159,600 from last month.

However, the median rate for March 2011 was down by 5.9% compared with one year ago. Analysts stated that the year-over-year decline in prices has a lot to do with most buyers preferring to find bargain foreclosures and opting for houses that are priced below $100,000.

Surge in Distressed and Pre Foreclosure Homes Dragged Down Prices

The rise in the number of distressed houses and pre foreclosure homes in Greensboro, North Carolina and in the rest of the Triad region has dragged down the prices of residential properties in the area. According to Triad realtors, recent prices have dipped to a level that is nearly 25% lower than what was recorded during the peak period of 2007.

The high number of foreclosed homes in Greensboro North Carolina and in the rest of the Triad market has been blamed by realtors for the price depression that characterizes the region's housing industry. In February of this year, prices of residences dipped to $156,000, declining by 24% compared with the February 2007 peak price of $205,000.

This rate is also the lowest ever recorded in the area in the past 13 years. Realtors further stated that, with foreclosure homes in North Carolina remaining elevated, prices of homes are unlikely to recover soon. Sales of residential properties also took a beating when the crisis started, real estate agents further revealed. In the past six years and a half, sales of residences in the Triad have declined from their peak by almost 48%, according to regional housing data. Realtors also claimed that the market is set for another difficult year and might have to face worse conditions before it recovers.

They reported that the huge amount of pre foreclosure homes and distressed houses in the Triad region will take around 15 months to get sold, judging from the pace of sales seen in the area in the past few months. They also reported that homes priced over $500,000 were the ones hit hardest by the industry slump, with most of them remaining unsold for months.

Currently, the region has a supply of homes in this price range equivalent to 40 months. With majority of the very few buyers preferring to find bargain homes rather than regular priced dwellings, realtors stated that houses priced above half-a-million dollars will likely remain in the market for an even longer time. Local agents and real estate brokers who have been in the Triad market for a long time have claimed that they have never seen the area's housing market in this condition before.

They also predict that things will likely get worse in the coming months as more pre foreclosure homes end up getting repossessed or seized by lenders. They claimed that the job market of the region should improve for the housing market to get out of its current slump.

New Home Market Rebounding Amid Bank and HUD Foreclosures

Although the level of bank and HUD foreclosures have remained elevated in most areas of Georgia, the new home industry seemed to be on a rebound in some markets. Certain locales of the state are posting higher number of housing starts and increased number of permits for home construction projects.

Despite tough competition posed by low-priced Atlanta foreclosure homes and cheap distressed houses in various areas of Georgia, new housing markets in regions like Cherokee County are able to push forward with construction projects. In March of this year, Cherokee issued a total of 37 building permits for single family dwellings, up from the 25 total posted in February 2011. However, the figure did represent a year-over-year decline from March 2010 when 66 permits were issued for similar types of construction projects.

A lot of buyers still find Georgia foreclosure homes better deals than new houses or non-foreclosed residences, but residential construction seemed to be looking up in certain areas of the region. Cherokee County is one of these areas if month-over-month data is to be used as basis. However, year-over-year permit numbers are still in decline, although analysts believe that this is to be expected since last year's figures were aided by the federal government's tax credit initiative.

Permits for the first three months of 2011 totaled 96, down from the 144 recorded the year before. Realtors though, are optimistic that housing starts will flourish in the coming months as the home buying season hits its peak. They did admit however, that the continuous flood of short sales and bank and HUD foreclosures is preventing the new housing market and the whole residential property industry from recovering faster.

They also stated that the tight lending market is not helping the sector at all, with buyers unable to purchase even bargain foreclosure homes due to difficulties in securing financing. Local realtors revealed that a huge number of county residents  are willing to purchase homes but are unable to do so because of lack of financing, with majority of them opting for remodeling or renovation options instead. One positive development that local realtors are seeing though is the rise in the number of older homeowners in the area.

According to real property agents, the number of homebuyers aged 55 and above will increase further in the coming months as more members of the Baby Boomer generation retire and decide to purchase bank and HUD foreclosures and even newly-built homes.

Foreclosure Homes by State Data Showed Arizona Still in Trouble

Foreclosure homes by state numbers showed that Arizona, along with Nevada and California, is one of the U.S. states still knee-deep in the ongoing housing market crisis. Despite the seemingly bleak condition of the region's housing market, some industry analysts believe that foreclosures and home prices are flattening; which is considered positive given the current status of the region's home market.

The number of Mesa foreclosure homes and distressed properties in Phoenix, Scottsdale and other key markets of Arizona has remained elevated. However, analysts are seeing some areas with prices of homes easing or remaining flat from last year, while inventories of distressed dwellings continue to drop in other markets. For the whole state, filings for pre-foreclosure properties dropped in April, while certain local areas continue to post higher buying activities in the past few months.

In Scottsdale, areas along Loop 101 are reportedly posting increased home buying activities. In this area, a total of 155 housing sales were recorded for this year up to the month of April, with less than a third of the total sales accounted for by AZ foreclosure homes. Local realtors revealed that bank owned property inventories in various markets of Scottsdale are diminishing and houses are getting sold much quicker, particularly those dwellings that are move-in ready.

With Arizona having some of the highest number of foreclosure homes by state, realtors stated that they did expect prices to tumble in the region. Recently though, some positive developments are being seen in the market, particularly in terms of prices. As an example, realtors reported that a bank owned house at Frank Lloyd Wright Boulevard was recently sold after nine days of getting listed for a price of $268,000.

The most surprising part of the transaction, real property agents revealed, was that the selling price of the property was 5.5% higher than its listing price. In a time when one can find bargain foreclosures offered at almost half their original prices, paying for a rate that is higher than the listing price is indeed unusual. Realtors further reported that houses getting sold a bit higher than their listing prices are starting to become quite common in some sections of Scottsdale.

Most local realtors though, admit that the Arizona housing market is still in a downturn and that it will take a lot of time for it to recover, particularly since foreclosure homes by state figures are predicted to rise again in the coming months. However, they stated that any increase in prices will be much welcomed.