The foreclosure crisis had a major impact on the housing market in recent years. However, many people forget that every dark cloud has a silver lining.
Although foreclosures often come in less-than-perfect condition, they tend to have much more affordable asking prices. In turn, many first-time homebuyers have the opportunity to purchase one of these distressed properties and give it a little TLC to turn it into their dream home.
Some markets have cheaper options that others
While nearly every housing market in the country has a foreclosure presence, some areas offer these properties at discounted prices well below the 24 percent national average. Based on RealtyTrac data, prospective buyers in the market for a foreclosure can expect to find the biggest savings in the following areas:
1. Chicago – 46 percent below local market average
2. New York City – 40 percent below local market average
3. Albany – 35 percent below local market average
4. Jacksonville – 32 percent below local market average
5. Poughkeepsie, New York – 28 percent below local market average
6. Palm Beach, Florida – 28 percent below local market average
“The challenge of the 2013 market, for many cities, is a lack of [foreclosure] inventory,” said Daren Blomquist, RealtyTrac’s vice president. “The best places to buy are where a lot of homes will become available.”
When observing these deep discounts, you might wonder why anyone would consider any other type of property when making the transition to homeownership. Unfortunately, this mind set could cause you to bite off more than you can chew.
Foreclosures often come with much-needed repairs, and they are usually much larger than simple cosmetic changes. In recent years, there were numerous reports of homeowners who entered the foreclosure process going out of their way to cause damage to their property. For example, numerous reports in the wake of the housing market collapse indicated that disgruntled households went as far as pouring bags of cement down the drains as well as the toilet before they departed.
While these are extreme examples, it’s usually safe to say purchasing a foreclosure will require some work. For this reason, you may want to avoid buying a distressed property unless you’re willing to get your hands dirty.
There are many potential projects if you’re interested in improving your home value. Refinancing your current home loan into a new FHA fixed-rate loan through Freedom Mortgage may allow you to free up money to make positive home renovations.
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