Recent reports from Pro Tech Valuation Services describe a much different outlook on the nation's foreclosure crisis in contrast to what the previous trends have shown. The headlines have been stating that it will take 7-12 years for the shadow inventory to decrease at a level that is sustainable for the marketplace. The newer reports are showing that some of the worse effected markets are now containing only 5 months of current inventory.
For the investors that have been waiting on the sidelines for banks and portfolio managers to dump distressed assets, you might just miss your opportunity as it passes you by if you aren't already taking advantage of the current foreclosure inventory. Below, the article lists the top 10 markets with low inventory, and the bottom 10 markets with the most inventory. It is no surprise that 3 of the top markets are within the state of Texas.
A steady job market and housing affordability will continue to lessen the chances of Texas losing it's spot in the lists of top marketplaces.
For investors in Texas, less foreclosures does not mean less investments. As I mentioned in my previous blog, there are still plenty of distressed homeowners. However, they are utilizing different strategies to remove themselves from the property they live in. The number one culprit is short sales. This still allows investors the opportunity to capture returns on discounted properties. It just may be a bit more frustrating and time consuming (you know what I mean if you've ever purchased a short sale). Aside from short sales and foreclosures, a market has on average 8% homes in a some sort of a distressed situation no matter what condition the marketplace or economy may be in. So, investors, the deals are out there. The key is knowing where to find them. The best place to seek investment properties is to find the professional real estate investing firms in your marketplaces.
Investors who are eagerly waiting for bargain prices from the potential foreclosure flood are likely waiting for something that won’t happen, according to the September home value forecast report from Pro Teck Valuation Services.
In the report, the company explained why it believes there will be no such flood.
“With regard to the U.S. foreclosure inventory, there has been a misperception that it is a problem for the entire market. In fact, it is quite concentrated in specific cities and neighborhoods,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “For this reason, potential buyers who have been waiting for bargain prices in desirable neighborhoods may be disappointed.”
Instead, the report focused on the current lack of inventory in San Diego, Orange County, and Los Angeles.
Overall, Pro Teck found that all three areas have less than 5 months of remaining inventory left.
“This is significant because in the Los Angeles market over the past 25 years, whenever this indicator was below five months, the median price increased by close to 19 percent the following year. Of course, it remains to be seen if the same appreciation happens again,” said O’Grady.
The report also analyzed price per square foot and months of remaining inventory in the three areas and found that the lowest priced areas have the lowest levels of inventory.
The report included a list of the 10 best and worst performing metros based on the company’s market condition ranking model.
The list of the top performing markets is based on a several indicators, such as changes in sales, foreclosure sales, prices, and inventory.
The reported noted that one common characteristic of the top markets is they all have experienced significant declines in active listings over the past year.
Top CBSAs Bottom CBSAs
Oxnard-Thousand Oaks-Ventura, California New Haven-Milford, Connecticut
Seattle-Bellevue-Everett, Washington Bridgeport, Stamford, Norwalk, Connecticut
San Diego-Carlsbad-San Marcos, California Augusta-Richmond County, Georgia-South Carolina
Los Angeles-Long Beach-Glendale, California Rochester, New York
Santa Ana-Anaheim-Irvine, California Spokane, Washington
*Houston-Sugar Land-Baytown, Texas Portland-Vancouver-Hillsborough, Oregon-Washington
Baltimore-Towson, Maryland New York-White Plains-Wayne, New York-New Jersey
**Fort Worth-Arlington, Texas Edison, New Jersey
Austin-Round Rock-San Marcos, Texas Nassau-Suffolk, New York
*San Antonio-New Braunfels, Texas Newark-Union, New Jersey-Pennsylvania