Foreclosures abound these days all across the country, spurred by the collapse of the housing market and a recession that took jobs and sent housing prices plummeting. Currently, 1.8 million homes in the U.S. are in some stage of the foreclosure process, and this number will only grow over the rest of the year.
Foreclosure sales constitute a big chunk of overall home sales. In 2010, for example, as much as 28% of all homes sold were repossessed properties. Normally, during the housing boom, that number was much lower – around 5% or so. Over the past three years, though, 28% has become the norm and could increase.
It is clear, then, that the foreclosure market is large and growing. But, what about the buyers?
A rough majority of people who buy foreclosures on the open market are investors, people looking to pick up a high-value, low-cost or discounted property, invest in it, and sell it during a rising market. The other buyers are financial institutions or individuals looking to settle down with a new home.
Of course, where you go determines the amount of discount you receive. Parts of the country have not been hit nearly as hard as others. California, Nevada, Arizona, and Florida rank as some of the leading areas of the country in terms of foreclosures, and are prime targets. It is prudent, then, to check listings and see what kind of prices are out there – and what kind of discounts there are – before buying.
While high numbers of foreclosures is the current trend and will increase, there are a couple of factors that will mitigate that somewhat over the next year. One factor is unemployment, which is dropping steadily. The other is increased economic conditions that result in housing values rising and inventory falling, which makes it easier for underwater homeowners to avoid the foreclosure route.
With 1.8 million foreclosures and growing, buying opportunities abound in the growing foreclosure market in the U.S.
