If you want to buy a distressed property, keeping track of foreclosure rates can be a useful way of determining the best times to purchase foreclosed homes. If you watch the market, you can buy a home below market price.
If you want to buy a distressed property, keeping track of foreclosure rates can be a useful way of determining the best times to purchase foreclosed homes. If you watch the market, you can buy a home below market price.
Foreclosure rates represent the percentage of foreclosures in a region. The rates depend on both the national and local economy. Anything from interest rates to the unemployment rate can have an effect on foreclosure rates, but generally the foreclosure rate will rise as the economy dips.
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To use foreclosure rates effectively as a method of evaluating your local housing market, you should look not only the present rate, but also the trends of changing rates over time. A six or 12-month span of the changing rate can give you a far better picture of the housing market than a snapshot of the rates for your current month. A rise in the foreclosure rate means additional houses on the market, while a fall in the rate means fewer choices will be available when you look through the foreclosure listings. The rate of change should also be considered as well. For example, a rapid rise in the foreclosure rate might point to an increase in houses, but it might also indicate a general drop in the economy. This could be representative of a rise in interest rates, which makes home loans more expensive, or an indication of a declining economic region. Because of this, you should examine the foreclosure rate within the full frame of the economic picture for your area.
Along with foreclosure rates for your area, you should also look at foreclosed home sales for the region to help you evaluate the housing market. If foreclosed home sales are keeping up with the rate of foreclosures, your area is likely experiencing a healthy housing market where homes are selling near the fair market value. However, if foreclosed home sales are below the foreclosure rate, then you could be looking at a slight glut of homes on the market, resulting in homes being let go at or below the market value. With home sales outstripping new foreclosures, your market is likely a tight one, with homes selling at higher prices. The key is to finding the best deal is to jump into the market when the foreclosure rate is steady or on the rise and home sales are keeping up or lagging slightly behind the newly available foreclosed homes.
Foreclosure rates can serve as useful barometers for anticipating the number of foreclosed homes likely to be available on the market. You can choose just the right moment to make a purchase, whether you're using a broker available through Reply! or bidding at a public foreclosure auction.