As anyone who hasn’t been living under a rock for the last 2 years knows, the housing market isn’t doing so hot, it could best be described as lukewarm or cool. The main problem right now is distressed inventory. According to a recent assessment by RealtyTrac (a leading foreclosure website), foreclosures accounted for 24% of all 2Q sales nationally. Oregon is sitting very close to the national average at 25%. The hardest hit state was Nevada, with distressed sales accounting for 56% of all 2Q home sales. In a “normal” market short sales, bank owned homes (REOs) and auctioned properties account for only 4-5% of market inventory. In 2005 there were roughly 100k homes sold as foreclosures, last year there were about a million, this year we will see a projected 1.1 mil. homes sold as distressed property. At this pace it will take roughly three years to work through all the foreclosures.
Amidst political pressure Bank of America has put a temporary freeze on all foreclosures nationwide as they review what some have called a dubious foreclosure documentation process in which they hire “robo signers”, people who sign hundreds of foreclosure documents a day without reading or reviewing them.
The national foreclosure crisis has created near chaos in the market and has hammered prices. The silver lining here though are the opportunities available to buyers. Some people shy away from distressed property as it is the ugly underbelly of the market. The reality is that this segment of the market will be here for sometime and will be hard to avoid for anyone involved in housing and real estate. If you are a buyer looking to find the best deal it will most likely be distressed. I would advise avoiding short sales due to the long and seemingly endless response times from the banks once an offer is made. I would also advise not going to auction unless you are well versed in the legality of the process and have a crystal clear understanding of the title of the property. REOs (real estate owned -by the bank) or bank owned properties are a good place to find a deal because the response time is fast, the home has already failed to sell at auction, and generally at that point the bank just wants to unload it quickly.
I have been looking at quite a few REOs in the PDX area, in my opinion these are the best buys right now, if you want to check some out just let me know.
-Matt