Investment Properties

California - Reaping the Benefits of Foreclosure Investment

Foreclosures have popped all over the US because of the housing crisis, a crisis that gave way to a world of opportunities for investors who have always wanted to get in on the real estate market but haven't had a clear shot at it until now.  While it is true that foreclosures can be found all over the US it is also true that not all of the states may offer optimal returns on the initial investment.  However, there are some markets where the real estate bubble gained incredible momentum such as the Californian housing market.

According to the California Associations of Realtors, the average value of houses all over the state has dropped dramatically but as an average they are currently down by as much as 35-40% and if you have been following the median prices of owner occupied properties, that means that houses have gone from 400K down to 240K in some areas. 

All these properties are realistically expected to go up in value as the market stabilizes and all of the toxic assets are purged from books of financial institutions.  Overall, property sales in California have declined by as much as 24 percent as reported by the CAR and as you may know the longer a house stays in the market the higher the chances the current owner of the property will drop the selling price until an equilibrium is found at which point a sale is made.

According to data gathered by real estate market research companies, back in 05 and even late 06 a property wouldn't stay in the market longer than a month of month and a half but now Californian properties stay in the market for a lot longer which has obviously forced realtors to suggest a drop in prices.

A research conducted by "Foreclosed Home Listings" indicates that those areas throughout California that experienced the most activity appreciation-wise, have also gone through a tougher and more sharp deflation compared to other states throughout the US.

As the Californian housing market weakens and properties stay unsold for longer period of times, the foreclosure market and particularly foreclosure investments heat up due to the fact that properties are now under-appreciated and the upside or earning potential is huge on this particular market.

So what does all this information mean to the average real estate investor? It has a lot of meaning really; the Californian housing market is among the most exclusive and tough to enter markets because of its average entry point and it is certain that houses will not remain at all time lows, this market is bound to resurface and only then those who have prepared and invested in this extremely profitable sector will reap the benefits of Californian foreclosures.

 

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