Foreclosures Decline in Portland, but not every part

Latest statistics from CoreLogic and RealtyTrac have shown that Portland foreclosures are on the decline in 2011, and will continue throughout 2012.  Rates of decline in Portland have dropped by 3.21%, making the percent of homes in foreclosure for the city 2.39%.   The amount of homeowners delinquent on their mortgage payments, is also lessoning.  The foreclosure percentages are fairing better than the nation, and also better than the state.  The state is at 2.8%, and that was an increase.  The overall national foreclosure rate is 3.41%, and that number is on the decline.

Things are sounding good for the Portland area.  RealtyTrac reports that the percentage of sales for the nation that are actual foreclosures is around 20%.  Whereas in the state of Oregon, only 15% of home sales are comprised of the bank owned (REO) properties. 

I thought I would take that a little bit further and show you what 2011 looked like in some local sub markets of Portland.

For the first month of the 2012, the following statistics are RMLS data of the percent of bank-owned, single family residences and condos, in proportion to the total closed sales for each area.

1. Beaverton/Aloha      35%
2. SW Portland            20%
3. Hillsboro                  36%
4. NW PDX 97229     10%
5. NE Portland             18%
6. SE Portland              29%
7. Lake Oswego/WL   18%
8. Tigard/Tualatin         26%

It appears there is more foreclosure activity going on than the Realty Trac suggests.  Or, the January 2012 numbers suggest that Nov and Dec sales were gobbling up more bank owned homes that the previous year's trend. 

Nevertheless, what occured in the last months of winter, is reflected in the first part of the year, and the result has left us with an anemic supply of inventory, both traditional, bank owned, and short sale.  We now are at the lowest level of housing supply in the last 3 years.  The metro area of Portland sits at 5.3 months.

Percentage of Distressed Sales in the Portland Market

Below is a graph made by the local multiple listing service showing the percentage of homes that are bank owned vs short sale, and compared to traditional transactions.  It's about 20-30%.  Remember a short sale, will likely become a bank owned, if it doesn't move into the SOLD category. 

Look at the size of the short sale listings that become a sale, vs the size of the bank owned that actually become a sale.  Most of the traditional listings that don't make it into the SOLDs, likely are home owners that decide now is not the time to sell, and they stay there.  However, most of the short sale sellers, that are unsuccessful at selling, still move.  When they move on, the house goes back to the bank.  And it will reappear again on the market. 

The inventory of bank owned will likely increase in 2011.  However, they have made their mark already in our marketplace.  Banks are interested in selling for fair market value these days.  It's the short sale sellers that are the motivated ones, that drop their price below fair market value, just to avoid foreclosure.  In these instances, these short sales are likely to fail and become bank owned.  It isn't truly new inventory added to the market.  It's actually the same house, now with a new owner, and typically, the price is fair market value.  The only grumblings are that we don't like what we see considered fair market value any more...

Can you find the REO in this REmOdel?

A beautiful REO transformation from the uninhabitable, to a home you could let your mother live in.

A live example of "One man's junk is another man's castle."

Below is a picture presentation of the before and after remodel project on an REO in Tracy, California.



Properties like this are being reformed all over the CA market, done by the NorthPoint REO teams.

What Do You Get For Nothing?

Normally, you get what you pay for right?
No effort, no return. No pain, no gain. No risk, no reward.
Okay, no more cliche' analogies...
But, there are some investment opportunities where you can literally, put nothing down, and still have gain for little invested.
Yes, It's Real Estate. Nice Real Estate. With Tenants. Nice Professionally Managed Tenants. Not some college town 5 hours away from the nearest airport. A real populated desirable cosmopolitan metro.

Take a look at a low down, high return investment in one of the nations largest and fastest growing areas.

The State of California's Real Estate Market

Many market conditions point to a healthy return of the housing market in California. Although, prices may not rebound at rates they did in the early 2000's, they also may stop falling any lower than they are now. That is only one reason to buy now.
Other reasons to buy now: Shrinking Inventory, Congress Driven Low Interest Rates, Cash Flow for investors, Homes are selling below the cost it takes to rebuild, etc...

Take a peek at this recorded webinar for a market update, and some great sample REO opportunities.

New Construction, Bank Owned and Financed at low down

Total Down at closing = $2,000
$175,000 Price. Appraised $195,000.
Originally priced well above $200,000
Builder could not sell in time before the bank took them back. Now the bank wants to finance for you, Owner or Investor, for $2000 down.

Located on a quiet street in Atlanta Metro, Georgia.
These are big 2000+ square feet, 5 bedroom, 3 bath houses.
Complete move in ready, blinds, fridge, landscaping.
If you want to rent it out, or rent it, the market rent is $1200.
2 Homes just like this are rented for $1200 in the neighborhood.
The Mortgage payment will be $948 for the next 3 years.

If you live in Atlanta, you know about the wonderful reasons to live there.
Which is why over 1 million people have moved there in the last 7 years.
The most growth for any city in the US during the same time.

Foreclosures without the headache

$128,000 priced
You Pay = $98,000 = Discount


Down = $2,000 = Low Down
Rented = $1,000 = Cash Flow
1 Yr Lease = Removes Vacancy Factor
Remodeled = No Additional Capital Needed

Finance 75% of original price and only put $2000 down.
The remainder is your discount on the house. 24% discount!!!

Rented $1000 per month until Jan 31, 2010.
Positive Cash Flow by $83-$163 per month after all expenses and management fees

Since its rented for the first year, which means no vacancy, then $163 x 12 is $1956
That’s the down payment back right there, returned in 1 year

6831 Collier
4 bedrooms
Remodeled
Close in Atlanta, 15 min. to downtown
1 mile to Walmart-Publix-RiteAid-Hollywood Video-Riverdale Plaza
Already Rented.

Atlanta Top 10
1. Georgia gains the 4^th most population in 2008. US Census.
2. Atlanta adds 1 million people in the last 7 years. Highest Growth in the US.
3. Atlanta is home to the world’s busiest airport,
4. 22 of the Fortune 1000 HQ. 5^th highest concentration of the Fortune 500
5. One of the most preferred cities to open or expand corporations by CEOs
6. Huge Rental Demand. Nearly 50% of residents are renters.
7. HQ for many mega-corporations like: CNN, Coca-Cola, UPS, Home Depot, Delta, Turner, COX and more.
8. Lots of Government jobs including, GA State Capital, Military Bases, Federal Reserve Bank, and the CDC (center for disease control)
9. Home to 5.1 Million people
10. Attractions for all, such as: NFL Falcons and Major League Baseball Braves, SIX Flags Amusement Park, Nascar at
Atlanta Speedway, and the Nations Largest Aquarium

Click to Enlarge the Cash Flow Analysis.