There’s a Moral Imperative to Buy Foreclosures
February 17, 2008
I read an interesting blog entry over on The Real Estate Bloggers:
Every time a neighborhood experiences 2.8 foreclosures out of 100 owner-occupied properties in a single year, crime there and in the surrounding blocks jumps 6.7%, according to a 2006 census tract study by the Georgia Institute of Technology and the Chicago-based Woodstock Institute. A related study by the same researchers concluded that homeowners lose 0.9% of their property value if they are within one-eighth of a mile from a conventionally foreclosed-on, single-family residence. A $500,000 home, for example, would drop $4,500.
I’ve read statistics like that before, but then they added this little bit to their blog entry:
To do your part to protect your community, please get a free trial at Foreclosure.com and see all of the foreclosures in your area. There is a 7 day free trial and you may find a deal that can be used to restore and repair a home that has been foreclosed upon and make some extra money at the same time.
Interesting way of looking at it. Sure, they probably get a kickback for referring people to Foreclosure.com - if you look at the actual blog entry, you see there’s a hyperlink to Foreclosure.com that goes through some pay-per-click mechanism and they make a few cents or whatever each time someone clicks on the link.
But that’s beside the point. I think their point is valid - there is kind of a moral imperative to buy foreclosure property. Houses that sit vacant in a neighborhood don’t do anyone any good. So, buy some Santa Cruz Foreclosure Real Estate today and revel in the good karma that will flow your way.
Posted by SantaCruzBroker at 9:54pm
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Median Santa Cruz home price drops to $599,000
February 16, 2008
Finally, the real state of the Santa Cruz county housing market is starting to show up in median home prices:
[From Santa Cruz Sentinel - Median home price drops to $599,000]
By JONDI GUMZ The median price for a single-family home in Santa Cruz County dropped to $599,000 in January, down 18 percent since December and a level not seen since 2004. … Only 63 sales closed escrow, a new low, the previous was 107 in 2006. A third of the January 2008 sales were for homes less than $500,000, more than double from previous months, and the subset of sales over $1 million, which had been as high as 25 percent, was 14 percent, the lowest in months.
For too long, the median home price has defied the reality out there on the streets, giving many buyers and especially sellers a false sense of what’s happening. Sometimes, we would see the median price inch up month over month, but for a long time it held steady at over $700,000.
But now, there’s been a significant drop in the median price, down to $599,000. Of course, it is worth noting that this is the figure for the county as a whole, and that some areas continue to hold up their values very well. That would be the usual suspects - Santa Cruz, Capitola, and pretty much anything near the beach.
And don’t go blaming Watsonville on being a drag on prices - hardly anything is selling down in Watsonville, although it had a much better month in January than it did in December, which was pretty much a train-wreck for sales. No, these lower-prices are county-wide, and even in Santa Cruz and Capitola, there are more bargains to be had than in recent years past.
The article is a good read, and it mentions that inventory is relatively low in many parts of the county, that many people who might want to sell are keeping their homes off the market, because now is not a good time to sell. That’s true, but what’s left unsaid is, what would happen if these same people found themselves in a situation where they had to sell?
Might we start seeing rising foreclosures in the rest of the county? Up until now, Watsonville (and to a lesser extent, Boulder Creek and the rest of the San Lorenzo Valley) has grabbed the lion’s share of the foreclosure activity. That’s because people tried to sell their houses, and found there were few buyers for them at the prices they were asking…and when you can’t make your house payment, and nobody wants to buy your house…you know the rest of the story.
Is this what lies in store for more of Santa Cruz county? I sure hope not, because what’s going on in Watsonville is pretty heartbreaking.
Posted by SantaCruzBroker at 9:46am
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Waiting for the bottom
February 12, 2008
I read an interesting article on MSN.com this morning:
Buyers: Should you wait for the market bottom?
It’s a surprisingly well balanced article. So often when you read these kinds of articles, the author has some kind of axe to grind and comes out strongly in favor of buying or not buying. This article is different, and really explores how it might be a good idea for you to buy now, or how you should put off a purchase for a later time.
Here’s an excerpt from that article, which sums up by giving you five reasons to buy, and five reasons to wait:
5 REASONS TO BUY
1. Prices in the neighborhood you are interested in are relatively stable. Either they are holding their own or increasing, or the pace of decline is slowing significantly. If you have to move and don’t like apartments, the small penalty you pay for missing the bottom may not mean much.
2. You plan to stay in the home for more than five years. If you can stick it out that long before selling, economists say you’ll probably ride out any downturn and come out ahead on price.
3. Your rent rivals a mortgage payment. If you can afford to buy, it can give you one bonus that renting can’t: the mortgage-interest deduction on your taxes.
4. You’ve found the right house in the right area for you. The schools are great. You love the area and know it would be hard to find another house like the one you have your eye on. In a better market, you would most likely have much more competition for that home.
5. You’ve built equity in your house and are moving to a place where homes are cheaper. In your new market, your money will go a lot further.
5 REASONS TO HOLD OFF
1. You’ve lived in your house less than two years. Chances are you haven’t had enough time to accumulate equity in your home. Indeed, you may have negative equity, if you live in many areas such as California, Florida, Arizona or Nevada.
2. Your job security is uncertain. If your company or business is in distress, it’s probably better to stay put until the smoke clears.
3. You don’t plan to stay in your next house at least five years. While it’s not important to buy at the exact bottom of the market, it is important to stay long enough to ride it out completely.
4. You don’t have good credit or a decent down payment. Do you have a job and income you can document? As a result of the subprime lending crisis, lenders are much more careful about whom they’re giving their money to.
5. You have an existing home to sell in a neighborhood where prices are dropping precipitously or where the number of foreclosures is spiking. In this climate, you’re probably better off waiting out the storm.
I encourage you to read the whole article, as it’s very well written and avoids a lot of the hysteria and hyperbole of many such articles. It’s definitely OK to buy real estate right now, depending on your situation. The sky is not falling, at least, it’s not falling everywhere for all people.
Posted by SantaCruzBroker at 8:39am
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