Top 10 Foreclosure Markets

Episode 156

This topic of today I think is going to lead to a lot of questions and actually give a lot of note investors out there some insight into potential markets and states they want to be looking at. One of the things that we always talk about when we’re out talking with investors or speaking is the United States is a large market. That’s a lot of places trying to figure out when you’re brand new. One of the things I am known for telling people is unless you have a tremendous amount of foreclosures in your backyard that makes sense for you as an investor, you probably need to be looking at focusing on five specific markets, five states to buy assets in or to buy the debt in. One of the things that I think that the note business bucks the traditional system is many times you have companies that like to talk about the foreclosure filings, “The foreclosure filings’ here. Foreclosures are up here.”

One other thing they have to look at is checking the state and identifying and understanding the foreclosure timeframe in each state. Some states are longer than us. Sometimes they’re shorter than each other. That’s always the weird correlation that we have to draw from, “It’s great that foreclosure’s up across the market.” I’ll give you an example. Florida is about a 12-month foreclosure timeframe. Foreclosure filings are up in Florida, defaults really started happening beforehand. They started happening a year before. That’s when the domino started to fall. That’s when us, as note investors have the opportunity to get involved before it goes to foreclosure, which we often see a lot of stuff six to twelve months before it ever hits the foreclosure auction. That’s the beauty of it. We have to opportunity to come and buy the debt and then workout hopefully a true win-win scenario with the borrower to make things happen.

Let’s dive into these markets. What we’ve also done is the staff’s been good about pulling median home prices in specific states. I think the best thing to do is let’s go through the markets, one through ten real fast. As always, if you’d like more note information, feel free to text “Notes” to the phone number 72-000 and we’ll be glad to send you some great information to help you on your note journey. Let’s dive into the numbers here.

The article comes from Bankrate, which they’re really good about posting stuff out on basically about a monthly quota basis. According to ATTOM Data Solutions, year-over-year foreclosures are down basically 10.5% from June to July. They’re down 10%. They plummeted 23.3% year-over-year. We are down a fourth from what they were last year. What does that tell you? The inventory is getting a little tighter as far as foreclosures but we still see a lot of stuff in these top ten markets. There are a lot of places, a lot of markets out there that homeowners are having a hard time making their mortgage payments on time through a variety of things.

Honestly, most of these markets are stuff that we buy in on a regular basis except one or two of them. We think these are some great opportunities as note investors because you’re going to see deals six to twelve months ahead of time. Number ten is Utah. Utah is up 59% than it was compared to last quarter. It’s basically one in every 2,000 homes in America; one out of every 2,017 homes in America is in foreclosure. In Utah, it’s one out of 1,731 housing homes. 251,000 is the median home price.

Why do we think foreclosure’s up? Utah is a relatively faster foreclosure market. The thing we don’t see a lot of most of the time, we don’t see a lot of debt there that we can buy for the most part. There is defaulted debt, it’s just that since it’s a faster foreclosure state, oftentimes that stuff gets gobbled up relatively quickly. You have the areas of Salt Lake City, great market to be invested in, it’s got a big upswing in foreclosures over the last year.

Going back five years ago is when we started seeing most of the Home Affordable Modification Programs kicking in, especially five plus years ago. Those are starting to definitely be default. 85% of those low mods are defaulting across the United States, and Salt Lake City had a large chunk of those and not just Salt Lake City but Utah had a large chunk of those. A great state, love that area, I’ve been going there for years, definitely a very positive place to buy. You can make some money out of this stuff. It has rebounded strongly since 2007.

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