If banks continue to give out more loans to purchase homes at discounted rates; This will do many things for the market. This will minimize the number of vacant and deteriorating homes and get them into the hands of paying homeowners once again. These properties could be used as investment properties and could be rented out to families or individuals looking to reside in a home. This will build consumer’s confidence once homes start to be in demand again; Home prices will level off and start to appreciate once more; These properties are great for buying now, and selling later on after it’s been rented for a while and has had a chance to appreciate.
Investors are often able to purchase these properties at an all time low. With the average foreclosed house prices at this moment, investors are able to get an average of $40,000-50,000 discounted of the purchase price. The only problem that might be posed for investors right now is that they will have to wait 3yrs before refinancing, or selling the property to cash out on the property’s equity.
There are many investors that have benefited tremendously in this down real estate market. While investors are benefiting, simultaneously there are millions of Americans that are in real trouble with keeping up with their mortgage payments. Lenders are happy to unload these troubled assets to any one looking to buy them. So that they can clear them off their books.
Investors seeking properties for investment purposes have no shortages. There are close to 2 million vacant and deteriorating homes sitting around nationwide. In addition to that, there are close to 10% of homeowners that are delinquent on their mortgage payments currently. Lenders can’t be blamed for wanting to rid themselves of these toxic properties, and get them into the hands of investors at deep discounts. If the banks continue to hold onto these toxic assets that are going to cause a shortage of credit that they could otherwise give out to new home buyers, and loosen up some of the “credit crunch.”
Many homes in the hardest hit areas across the country are seeing their property value drop 30-40%. If you are able to buy and are looking for discounts there are all around. Until we have hit an equilibrium price in the market, the prices will continue to fall before it levels off.
In time the market will correct itself even if government does little or nothing to correct this mess we are currently in. The cheap properties will get bought, and supply and demand will get back in order for house prices to increase at about the normal rate of inflation; about 3-6% annually.
