Foreclosures for Five Grand: Buyers are Back in Control
February 8, 2007
Buyers who waited for years on the sidelines – left out of the game by
prohibitively high prices – are now enjoying the fact that the tables have
turned. No longer is it a runaway bull market, and as sellers become
increasingly desperate to unload burdensome property, homebuyers and investors
are picking up undervalued assets. During 2006, some 4,000 foreclosed homes in
the USA sold for less than $1,000, according to statistics reported in the
financial media.
What can $5K buy in 2007?
A quick perusal of active foreclosure listings on the Internet revealed that the
recent bursting of the real estate bubble has sent some prices back to the
old-fashioned range. For example, we found a two-bedroom in Fort Wayne, Indiana
for $3,750. Another property listed in Kokomo, Indiana sports a gigantic five
bedrooms and two bathrooms, but carries a list price of only $4,500.
Low prices at high elevations.
Another happy hunting ground is Colorado. Although the state has won many
accolades as one of the best places to live in the USA, Denver continues to
experience a record high volume of foreclosures. Part of the reason is that the
Mile High City underwent aggressive expansion and was overbuilt, leaving a
supply that simply outstripped demand. Then interest rates across the nation
spiked and real estate prices suffered, instigating a foreclosure market in
Denver that is one of the hottest in the country. Today there are property
listings in Denver for as little as $500. While doing a quick search we
discovered one currently in pre-foreclosure priced at $3,278, and there are
literally thousands of homes at steeply discounted prices throughout Colorado.
The expansive foreclosure phenomenon:
While cities like Detroit and Denver make headlines as hot markets, it appears
that no region of the USA is immune from foreclosure fever. Even consumers with
great credit who hold adjustable rate mortgages and interest-only loans have
watched their monthly payments double within the past two years. And a record
number of homeowners borrowed more than they could afford in order to finance
other purchases, using the equity in their homes as collateral. When monthly
payments rise and the value of assets deflates, borrowers find themselves
“upside down” in loans, or owing more than their homes are worth. The net
result is that an unprecedented number of mortgages are going into default,
producing a foreclosure market that may just be beginning to pick up steam.
Ten thousand reasons to shop:
Searching nationwide listings for properties listed at $10,000 or less might
seem like a futile exercise, since you can rarely find a good used car – much
less a piece of real estate – for that kind of cash. But a one-hour computer
search uncovered some unexpected data, as the samples below illustrate:
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18 listings in Texas priced under $10,000.
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34 in Tennessee in that price range.
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More than 40 listings in New York State for 10 grand or less, including a
6-bedroom and 2-bath home in Buffalo for $4,500 and a 5-bedroom with 3
bathrooms in Syracuse, for $4,900.
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In Dayton, Ohio a 3-bedroom, 2-bath for under $5,000 came up on the screen,
among more than 100 Ohio listings priced below $10,000.
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Expanding the search to Indiana, there was one in Fort Wayne for $8,900 – with
a generous five bedrooms.
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Nearly 300 foreclosures in Michigan – all priced for $10,000 or less – included
a 6-bedroom, 3-bath home; a 5-bedroom, 2-bath home, and a 4-bedroom, 2-bath
home; each priced at $9,900.
Practically every state in the USA is well-represented in the less than $10,000
category, but deeply discounted foreclosures move quickly, so it is important
to subscribe to as much fresh data as possible to stay informed for a day to
day or week to week basis.
With the advances in Internet-based real estate research that has become
increasingly easy, and can even be done as a part-time venture from home. As a
glance at a cross-section of active distressed property listings indicates,
those who make the effort in the coming months also stand to make substantial
profits.