Where are the cheapest homes for sale? Investors with deep pockets are picking up homes for 50% of current market value, regular home shoppers are looking for similar deals but do not want to pay all cash or in bulk. You may want to sit on the fence as home values will most likely go lower in 2010.
The Los Angeles Times reported the following news headline Feb 16, 2010, “New wave of foreclosures by end of 2010 is feared” (https://www.latimes.com/business/la-fi-mortgage-mods17-2010feb17,0,7573498.story). This is just one of the many news articles reporting how further foreclosures will eventually occur in 2010 and the result would be lower home prices in many communities.
Moody’s Economy.com has reported that approximately 4 million homeowners are 90+ days late on their mortgage or are already facing foreclosure proceedings. This number was pulled from data analyzed from credit reporting agency Equifax.
There have been other news articles stating that the number of foreclosure filing are slowing down and a lot of market analysts are optimistic that recovery is near. But….Economy.com com estimated that 2.4 Million borrowers are expected to lose their home this year. 2009, there were 2.1 million foreclosures. With the job market still crawling with company’s trying to find new ways of surviving, it is assured that more homeowners will foreclose and the number of foreclosures that will occur this year will definitely lower home values in neighborhoods by 15-50% of current market values. All it takes is for one home in a neighborhood to sell below market value to bring all other home comparable values down.
The states to be hit the hardest is California, Florida, and Nevada. The one statistic I love to watch is California foreclosures. In December, Californians that were 90+ days late on their mortgage hit 11.4%, compared to 8.4% nationwide. California is definitely a state that is filled with frustrated homeowners that complain about the red tape of lenders and I suspect because of this fact, many of these homeowners will give up and just walk away.
If you can get a home at 80% of current market value, it should be safe even if the housing values pull back 20%. Obviously, the larger discount the better. Consider picking up fixer uppers that you can rent and fix up later to sell when the housing market improves. Based on current market activities, the best deals for 2010 will most likely be found at the end of the year after the floodgates open and foreclosures flood the market.
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