“If these are bank owned, then the price drop is imaginary. These bank homes have been gutted, have had no maintenance for years and the buyer has very little inspection options so consequently the homes are priced at deep discounts.”
Sorry but not true. We just purchased a fannie mae owned property. It is a 4 year old home in good shape and included a $8,000 water softener. The only thing missing was the kitchen appliances. Most of the foreclosures we looked at were not trashed. It really depends on what the previous owner and their renters did.
We also purchased one and we were only allowed limited access. For example the heating system had the water removed as well as the regular pipes. We had to take the chance that there was no damage to the pipes and the furnace or the sewer system. If there was we could have incurred 10’s of thousands of dollars. The bank sold as-is and felt they priced it low enough that such things should be covered.
Also, the purchase process was difficult. We never knew until the closing that we actually had a deal.
It also took as 4-5 months and thousands of dollars to make the necessary repairs and upgrades for it to be usable.
Here in Yuba City CA we have foreclosures that are trashed and many in good shape. I can’t say with certainty but there seems to be a trend.
Many of the foreclosed homes that were badly damaged during the repossession were owned by Hispanics. Many of the homes owned by eastern Indians (Sikhs mainly) were turned over in good shape, with maybe some kitchen appliances removed.
I know this sounds racist or something but that is what I noticed during my home search in 2008. Many of the foreclosed damaged homes had been owned by people with Spanish surnames. Many of the foreclosed homes that weren’t damaged often had the paint shemes that seem to be popular with the Sikhs like painting one wall in the living room brick red, etc.
Anyway, 2 very different cultures it appears. Lots of vindictive damage from previous hispanic occupants vs just peaceful surrender of homes by the Sikhs. So investors looking for homes here in Yuba City really get a deal on the previous Sikh-owned homes as they are not generally damaged.
As far as home prices, they seem to be still creeping down here in Yuba City but not very fast. I bought my home at the end of 2008 after average prices in Yuba City fell 28% in one year. I got lucky and was careful, so I’ve only lost about 15% on my home so far, and so far it is still better than renting between my 5% mortgage rate and home tax deduction. I could never own my very cool German Shepherd in an apartment or have a garage for my sports car.
My house is a HOME, and an inflation hedge, but is meant to give me a beautiful place to live in a wonderful neighborhood, not meant to be an investment first and foremost. I think it is foolish to buy your house primarily as an investment.