Foreclosed Properties Aiding Low-Income Buyers

Posted on November 13th, 2007 by saman

There are so many foreclosed homes for sale at reduced prices that new low-income home buyers have gained an unexpected opportunity to become homeowners. Homes that were recently valued at $450,000-$500,000 are now available for as much as $150,000 to $175,000 less, putting them in reach for people that could never have owned a home in that price class previously. There is little doubt that this may be the only thing positive to come out of the recent housing meltdown.

Foreclosures are admittedly still just a minor percentage of the overall housing picture. However many neighborhoods have so many foreclosures that they have driven everyone’s home values down. Some finance professionals have commented that this latest crisis that has deflated the home values really amounts to a ‘balancing out’ in areas where prices had skyrocketed between 2005 and 2006. Housing analysts, however, have expressed concern that speculative investors will snap-up many of the foreclosed properties and rent them out until prices go back up. To prevent this, some areas are considering the creation of regional land-bank from a private/public partnership to buy the foreclosed homes and make them affordable to buyers and renters.

Right now, there are thousands of foreclosed homes nationwide with the greatest number in Nevada, California, Arizona, Ohio, Massachussetts and Florida. And industry experts are predicting that the numbers will continue to escalate through 2008. In some inner city areas, home prices have declined as much as 40% opening buying opportunities for low-income folks that didn’t exist last year. Some realtors have said that they are now working closely with more low-income shoppers tha n ever before.

Notices of default have increased as much as 160% over the same period last year and the prognosis from government number crunchers predict that as many as 2.2 million homes nationwide will end up in foreclosure by mid-2008. Government and state legislators have been actively exploring ever conceivable option for new laws to enact that will both bring some relief to current homeowners in distress and prevent future owner’s from falling into the same financial chasm. Add to this the overall decline in home values, including new homes being offered by builders and developers, and it is not a pretty picture at all. Nevertheless the current situation continues to offer new possibilities to former renters to become homeowners.

Banks and other financial organizations have suffered severly during the current crisis. Some have lost billions in bad mortgages and a few, while still showing some profitability have seen an astronomical decline in their company’s profit picture this year. In addition, quite a few firms who were big in the sub prime mortgage lending business have actually gone out of business during the past year. There have also been allegations that unscrupulous lenders falsified mortgage loan applications in order to close deals with families that could not have qualified with the true facts shown. Some appraisers are also said to have ‘fudged’ appraisal values to aid and abet these lenders in their quest for big profits. Clearly, their efforts have backfired on them and the homeowners as well.