MSNBC had an article a few days ago about the effect of foreclosures on housing prices. There’s not too much new information here, other than reiterating why it’s an excellent time to buy investment property. Check it if you’d like, or here’s a clip.
While foreclosure sales are bad news for homeowners in neighborhoods with high foreclosure rates, they are a boon for well-financed buyers looking for properties at bargain prices. And in broad terms, economists view them as part of getting back to more realistic prices after years of excess.
Alejandro Diaz-Bazan, who sells foreclosed properties in Miami, said banks seeking to unload foreclosed properties are looking for buyers that can close deals quickly, and therefore need to have a hefty down payment. This month, Diaz-Bazan said a European client bought two foreclosed condominiums as an investment.
“The bank really is out to move them, to liquidate them,” Diaz-Bazan said. Despite the downward pressure on prices, he said, “property prices in Miami have not dropped enough” for the market to rebound.
Yup- the smart ones are buying right now. I think it’s been obvious for a while, I’ve certainly been preaching it for a while. It’ll be interesting to see the mass media spreading the message now tho- and how many investors will finally dive back into the market once their news anchors start talking about it. 
Too bad the REALLY good deals will have been snagged up by then… or will they?
HERE IS MY CONCERN ;
The market in Vegas , Florida , Phoenix may seem a good time to buy now but at the same time it seems the market may drop for another year.
If i buy in these areas what are the current fmv’s they’re not true because the comps keep dropping so what would it take to get a positive cash flow and how long for the appreciation rate to take a factor?
so the homes that sold for 300k 2 years ago you can buy for 120k today with a negitive cash flow how long untill the market reaches 300k again and the rents go up?
I’am buying in areas that have a positive cash flow with little down and a good (projective) apppreciation value.
Larry-
Sorry for the delay, my blog wasn’t notifying me of new comments posted. A current FMV is the FMV currently. Not last year, yesterday, or 2 years from now- an FMV is Fair Market Value TODAY. You’re asking if anyone can predict the future of a market, and well, that’s tricky to do. However, my point is that if you buy a property that is worth $300k TODAY, but you only pay $210k for it, aren’t you pretty safe with your investment? That’s a 30% discount in value. If the market dropped 10-20%, you’d still have a decent deal (and most likely, you would’ve sold with a nice profit long before it dropped 20% in value on you). And no, $300k homes are not going for 120k now, not even close.
Here’s the deal- Arizona is an appreciation state- just like California, Vegas, etc. It is very difficult to have a decent ROI AND Cashflow here in AZ. Yes, you can purchase a property at a good discount, put 20% down on it, and have some minimal cashflow. However, your ROI off the cashflow isn’t that great. The ROI is great when you factor in the appreciation. On the flip side, you can go to the mid-west, and invest for cashflow. Yet, you’re not going to get much in terms of appreciation, compared to AZ, CA, NV, etc.
It’s either/or. You either get great appreciation (AZ Averages 5% annually based on historical values) or you get great cashflow- but you don’t get both. You can purchase a $50k property in the midwest, get it to cashflow a few hundred a month- and in 10 years, it might be worth $65k, maybe. Or, you can purchase a $300k property for $210k, get minimal cashflow (if any) and have it be worth MUCH MORE in 10 years, giving you a GREAT ROI. Appreciation state ROIs ALWAYS outweigh cashflow ROIs. It just depends on your financial strategy, and what you’re looking to do.
If you read any of the studies I post on this site, you’ll see that Arizona, in the long term, is VERY safe and isn’t going anywhere. When it’s projected to DOUBLE the National Population Growth Rate by 2020, I think that speaks volumes. Throw in the job growth, industry growth, and the fact that we’ve only developed less than 7% of our available land resources (with more than a 99 year water table), it’s a no-brainer.