Housing woes lure back bold buyers
From California to Florida, investors snap up distressed properties, hoping to profit.
By Ron Scherer | Staff writer of The Christian Science Monitorfrom the May 16, 2008 edition
Page 1 of 3
|
This feature requires a newer version of Macromedia Flash Player and javascript-enabled browser.
|
Reporter Ron Scherer discusses how some bold investors are taking advantage of huge markdowns in today�s distressed housing market.
New York - The depressed housing market is now attracting buyers who look at boarded-up homes, rising foreclosures, and falling values and see, not disaster, but a rich opportunity.
They have cash so they don't need to go to the bank. The homes they're eyeing are selling at 2004 prices or lower. And they are certain – make that almost certain – that they will profit from the nation's real estate problems.
While the buying doesn't herald the bottom in home prices, nor will it help most people facing foreclosure, real estate experts say it is plucking some "for sale" signs out of the nation's front yards. It's also providing some needed cash for real estate developers. And it's helping banks unload unproductive properties, which might start to free up some of their capital so they can make more loans.
Some signs of lot-buying bravado:
•In Cape Coral, Fla., a developer dropped prices by up to 50 percent on 116 new homes and townhouses and saw them snapped up by lines of eager buyers.
In the depressed California market, an investor is organizing a tour of homes to Anaheim and Orange Grove for those who have the nerve to buy real estate as an investment. His motto: buy and hold.
•Even in the most distressed sections of Cleveland, real estate operators are buying 50 to 100 properties at a time to try to resell them.
"This is a wonderful time to buy," says Steve Dexter, who is organizing the tours in Orange County and owns 27 houses himself.
The buying comes at a time when the number of homeowners facing foreclosure is soaring. On Wednesday, RealtyTrac, which monitors foreclosures, said the number of homes facing foreclosure rose 65 percent in April compared with a year ago. For roughly half of the 243,353 homeowners receiving a foreclosure-related filing, it was their first notice.
"We've never had more foreclosure filings than this past month; we're at historically high levels," says Rick Sharga of RealtyTrac in Irvine, Calif.
It could get worse. Through November, some $20 billion to $25 billion in adjustable rate mortgages will reset each month. As interest rates tick up, many buyers will be unable to carry their monthly payments. Economist Mark Zandi of Moody's Economy.com, estimates there will be 2.25 million foreclosures this year, up from 800,000 at the low point three years ago.
RSS feed
