PMI Mortgage Insurance Co., recently released its Summer 2008 U.S. Market Risk Index(SM), which ranks the nation’s 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in the next two years.
As you might expect, risk from their perspective has continued to intensify in many of the MSAs where home price growth had significantly exceeded historical norms during the housing boom, but risk has continued to decline in many other areas across the country.
Not at all surprising is the fact that the Top 10Â markets with the highest potential for future price declines are:
1. Riverside-San Bernardino-Ontario, CA
2. Fort Lauderdale Real Estate-Pompano Beach-Deerfield Beach, FL
3. West Palm Beach-Boca Raton-Boynton Beach, FL
4. Riverside-San Bernardino-Ontario; CA
5. Orlando-Kissimmee; FL
6. Â Las Vegas-Paradise; NV
7. Tampa-St. Petersburg-Clearwater; FL
8. Santa Ana-Anaheim-Irvine; CA
9. Los Angeles-Long Beach-Glendale; CA
10. Miami-Miami Beach-Kendall; FLÂ Â Â Â Â Â Â
See the full 2008 U.S. Market Risk Index(SM), report here.               Â
While some may look at this as a signal that it is not a good time to buy, the prudent and knowledgeable investor knows that now is the time to strike. Investors know that millionaires are made in times like these and in what most may think are the worst of markets, they are indeed the best of markets for investors.
Why? Most of the declining markets were hit very hard with the fall out from the subprime mortgage crisis. Subsequently the banks and lenders in those area have had to absorb tremendous losses and are sitting on high numbers of REO properties that they MUST liquidate.
This means that experienced and competent investors can leverage statistics like these to get the best deals possible from these most motivated of motivated sellers.
We are finding in the Fort Lauderdale real estate market, one of the top risk markets according to the above referenced study, that banks are letting go of REO bank owned properties at discounts of 40%-60% off of estimated market value.
This is not unique to our market. These kinds of deals are available all across the Country in high risk, foreclosure laden areas.
Mark Partipilo, a Las Vegas real estate investor, stated “In this market, there are so many REOs that the banks are getting their clocks cleaned. This might not be the bottom, but waiting six months might be too late.”
“Banks that are not in Disneyland recognize that these sales are the reality today,” says Denny Grimes, a practitioner and owner of Denny Grimes Co. in Ft. Myers, Florida.
“Markets where a large share of homes are heavily discounted because of REO sales, they may be seeing a bottom,” says Cynthia Kroll, an economist and real estate market scholar at the University of California, Berkeley.
While many Realtors miss the boat on these opportunities by not educating themselves as to how to work with investor buyers, those who do are seeing a sales similar to the frenzy that took place at the height of the housing boom.
It’s not odd to see hundreds if not thousands of prospective buyers attending auctions of distressed properties and bank owned homes.
Find your real estate market on the list below or on the attached report. If your area falls in the upper half of the list, saddle up and get ready to enjoy the ride. You need to be prepared and you need to know how to seize these opportunities.
Investors…what can I say, it’s Christmas in July. Contact your local Realtor and look at buying some bank owned property at 40%-60% below market value.
If any of you are interested in buying bank owned properties in the Fort Lauderdale real estate market, please feel free to contact me.
