Top 10 Cities for Buying Foreclosures
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Price is a huge factor for investors and hedge fund groups that are interested in real estate investing. For that reason, many investors turned to purchasing foreclosures in recent years—the properties were discounted, and many were in great locations that were previously cost prohibitive.
But as the number of investors snapping up distressed properties grew, and the inventory of foreclosures decreased, prices began to rise. Huge hedge fund groups that are spending billions of dollars on real estate now occupy many of the markets once considered hotbeds of foreclosure activity, including Las Vegas, Phoenix, and Miami, thus driving up prices. In some cases, REOs in these markets are actually selling for higher prices than non-distressed homes.
Following the finalization of the National Mortgage Settlement in April 2012, foreclosure inventory has slowly increased, rising to about 1.5 million properties as of the first quarter of 2013. That’s up roughly 12 percent from the five-year low reached in May 2012, and it’s up 9 percent from the first quarter of 2012.
The cumulative estimated market value of homes that are bank-owned or in foreclosure was $200 billion as of the first quarter of 2013, up 14 percent from the $175 billion cumulative estimated value in the first quarter of 2012.
The market has shifted
Once, four sand states—California, Arizona, Nevada, and Florida—accounted for more than half of the nation’s foreclosure activity (properties subjected to default notices, scheduled auctions, or bank repossessions). Today those states, with the possible exception of Florida, are well on their way to recovery.
Now the opportunities for investors are elsewhere—largely in the Midwest and Northeast, where most of the nation’s 23 judicial states are located. In judicial states, the foreclosure process must be handled through the state’s court system. This extends the timeline of the foreclosure process. It can also lead to a backlog of foreclosures—they can’t go on the market until that process is completed. Inventories also rise and fall by the speed with which lenders process backlogs.
Below are ten markets that are not normally considered among the national leaders in foreclosures but that are becoming increasingly attractive from a financial point of view. They all feature healthy foreclosure discounts—the difference between median foreclosure prices and median prices for all home sales in a market—which is critical in determining the profitability of a foreclosure investment, whether the property is resold or held and rented out.
The months’ supply of distressed sales for these markets is more than a year in every case, and in some metros, it’s over two years—which means there’s plenty of inventory. Little, if any, hedge fund activity is evident to date, so prices remain reasonable—though it’s hard to say how much longer it will take before investors discover these markets.
Ten New Foreclosure Markets
Steve Cook is Executive Vice President of Reecon Advisors and covers government and industry news for the Reecon Advisory Report.
Cook is a member of the National Press Club, the Public Relations Society of America and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. He is a graduate of the University of Chicago, where he was editor of the student newspaper. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate and financial services companies, and trade associations, including some of the leading companies in online residential real estate.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.