Monday, July 31, 2006

'Banks View Foreclosures As Potential Assets'

The Long Beach Telegram has this report on buying foreclosures. "If you're looking for cheap properties, don't start counting those eggs just yet. A foreclosure search engine this week reported a 25 percent year-over-year increase in foreclosure activity from the second quarter of 2005. 272,109 properties nationwide entered some stage of foreclosure, that amounts to one new foreclosure for every 425 households, higher than any quarter of last year. Opportunistic buyers aren't finding an abundance of quick deals out there right now, Realtors say."

"Among the nation's top 10 states with the highest foreclosure rates in the second quarter were: Utah, Indiana, Nevada, Illinois, Michigan, Florida and Ohio. Colorado's second-quarter foreclosure rate ranked as the nation's highest, with one new foreclosure filing for every 158 households."

"California and Florida followed Texas to round out the top three states with the highest total foreclosure filings. California reported 27,606 properties entering some stage of foreclosure, more than twice the reported number in the second quarter of 2005. There were more than 18,000 homes in some stage of foreclosure in Los Angeles County."

"But the sellers' market over the last five years has changed the way banks and investors are viewing foreclosures, said Richard Daskam, realtor in Los Alamitos. 'Foreclosures sound good in theory, but now the banks have really gotten smart and they have realized they can get market value for their homes,' Daskam said."

"'Instead of selling it at a loss or a break-even, they actually made money off of the deal,' Daskam said. 'They realize now that they don't have to lose money on these foreclosures.'"

"Not only are banks viewing foreclosure properties as potential assets, but large groups of real estate investors continue to snatch foreclosures quickly off the market despite the slowdown. 'In the past you could go out there and walk in with 50 percent equity if you bought a foreclosure, immediately it was double what you paid for it,' Daskam said."

"But if the market continues to slow in the next year, look for some deals. However, Daskam warned, 'buyers should do their homework and make sure it's priced right.'"

3 Comments:

At 3:17 PM, Blogger Ben Jones said...

This realtors spin is right in a way. I don't want to touch foreclosures until the banks are begging people to take them off their hands. Sure, in the biggest housing boom of all time, the banks have made money on them. But who holds the loan and who has the cash?

 
At 4:52 PM, Blogger OC BEAR said...

I bought my first House in Riverside in 1997, the builder had gone bankrupt and it and other homes sat vacant for 5+ years. A new builder came in and needed to clear-out this inventory, before it could stat selling it's new phases. This may work again by 2010. Just food for thought.

FYI, in 1990 they were goin for 225K we paid 137K.

OCBear

 
At 10:26 PM, Blogger Peter T said...

It will be a question of supply and demand: With demand limited due to high prices, a large wave of foreclosures due to option mortgage resets in 2007 and 2008 would give the bank too much supply into their portfolio. Where will prices be headed then?

 

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