Archive for November, 2009
Investors flocking to foreclosures
One out of eight (12.1 percent) homebuyers today plan to purchase a home as an investment property, compared to 5.6 percent seven months ago, Move Inc. .
Foreclosure buyers, accounting for 25.3 percent of consumers interested in purchasing a home, are a major source of potential investment activity for today’s housing market, Move says. Forty-two percent (42 percent) of potential foreclosure buyers regard their purchases as investments, while 57.6 percent plan to live in the foreclosed home themselves.
Foreclosure investors, according to the Move survey, intend to convert their foreclosures into rentals (13.2 percent), fix them up for re-sale (11.3 percent), or house a family member until the home can be sold at a profit (17.4 percent).
The survey found foreclosure buyers expect to profit from both deeply discounted purchase prices, as well as healthy appreciation rates over five years. Most foreclosure buyers (58.2 percent) expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a 25 percent or greater discount. While, 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more during that same investment horizon.
Foreclosure decline only temporary
Foreclosure activity has fallen for three straight months, according to RealtyTrac. But the firm’s Rick Sharga says this is no trend. “I think what we’re seeing instead are some process delays,” says Sharga, “and we see some legislative programs that are creating what amounts to a temporary delay in foreclosure proceedings.”
