Housing woes lure back bold buyers
From California to Florida, investors snap up distressed properties, hoping to profit.
The depressed housing market is now attracting buyers who look at boarded-up homes, rising foreclosures, and falling values and see, not disaster, but a rich opportunity.Skip to next paragraph
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They have cash so they don't need to go to the bank. The homes they're eyeing are selling at 2004 prices or lower. And they are certain – make that almost certain – that they will profit from the nation's real estate problems.
While the buying doesn't herald the bottom in home prices, nor will it help most people facing foreclosure, real estate experts say it is plucking some "for sale" signs out of the nation's front yards. It's also providing some needed cash for real estate developers. And it's helping banks unload unproductive properties, which might start to free up some of their capital so they can make more loans.
Some signs of lot-buying bravado:
•Even in the most distressed sections of Cleveland, real estate operators are buying 50 to 100 properties at a time to try to resell them.
The buying comes at a time when the number of homeowners facing foreclosure is soaring. On Wednesday, RealtyTrac, which monitors foreclosures, said the number of homes facing foreclosure rose 65 percent in April compared with a year ago. For roughly half of the 243,353 homeowners receiving a foreclosure-related filing, it was their first notice.
It could get worse. Through November, some $20 billion to $25 billion in adjustable rate mortgages will reset each month. As interest rates tick up, many buyers will be unable to carry their monthly payments. Economist Mark Zandi of Moody's Economy.com, estimates there will be 2.25 million foreclosures this year, up from 800,000 at the low point three years ago.