A year ago, all-cash transactions accounted for one-tenth of all real estate sales. More recent sales figures of buyers who bought with cash are as follows: November 12%, December 15%, January 17%
The bottom has come and gone in most markets. The bottom of the market in the U.S. occurred in late 2008, prices stabilized in 2009, and now prices are going up in 44 percent of all cities from last year, and sales are brisk. In many markets, there are 10 to 20 offers on each bank foreclosure, driving up the asking price.
Investors see great foreclosure deals at all price ranges and are snatching them up. Property prices in places like Phoenix, Las Vegas, California, and Florida went down 40 to 75 percent-way below construction costs. As soon as the foreclosure inventory is absorbed, these prices will go back to nearly the same as what home builders are offering their new-construction homes.
Foreclosure properties in hardest-hit areas are going up more quickly in price. We are buying near-new, 3-bedroom, 2-bath homes in great cities in Florida for as little as $60,000-up from $50,000 just a few months ago. In Phoenix, you could have purchased the same homes here for about $60,000 at the market bottom, but they are now $80,000. In Las Vegas the same type of new homes were also selling for $60,000, but they are now over $100,000. Those are incredible increases in a very short time and are likely to keep going.
Banks hold on to properties. There is a lot of buzz in the street that there will be a lot more foreclosures in 2010. However, banks have become smarter and are holding them back so as to start buoying up prices. Actually that is good news for everyone. Loans for investors are still hard to qualify for. Lenders are plain paranoid about loaning money to investors, both for residential and commercial property.
They want 20 percent down, 680+ FICO scores, six-month reserves, and you can’t own more than four (in some cases 10) properties. If you own over 10 properties, then forget it. Often they will pre-approve you and then turn you down just before closing.
Savvy investors are coming back into the market and picking up great deals, especially in the hardest-hit areas of the country. Near-new homes that used to sell for $250,000 to $300,000 only three years ago are now going for as little as $60,000 to $80,000. As soon as this bank-owned inventory is bought up, prices will have to go back to nearly what new home builders are selling properties for, which is twice their price now. This is an exceptional time to be buying!
Marshall Reddick, PhD, is the former head of the Real Estate Continuing Education program at California State University, Los Angeles. He is founder of the largest real estate network in the country, which features 12 monthly real estate clubs throughout California and one in Oregon. For a FREE, 25-page, bimonthly real estate newsletter, Click Here
Looking to find the best deal in the USA, then visit www.mrren.com to find the best advice on where to buy investment real estate. Get a totally unique version of this article from our article submission service
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