Real Estate Blog

I don't like "negative" numbers of any kind. Not the ones that show I'm losing my money or that my clients are losing their money. And I really don't like reporting something negative like a 22 percent jump in foreclosure filings in Texas in January 2011 over the 2010 numbers.

But wait, you say, aren't we in this to buy property and make money? Of course we are, and foreclosures mean more properties that will be attractive to investors. But we certainly don't have to enjoy buying up and re-packaging someone else's dream.

In the statement announcing the numbers RealtyTrac CEO James J. Saccacio said, "We've now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000. Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing."

Personally, I take some comfort from that. These are not a "new" batch of homeowners in trouble over their mortgage, but the people who have been in trouble all along whose luck has finally run out. I'm sorry for them, but I'm really glad their numbers aren't growing. All told, there were 14,897 foreclosures filed in January with an average value of $189,599. The total increased approximately 33.46 percent over December and represents about 1 in every 653 homes.

So, what can we say about a situation that's just that depressing? I like to think of real estate investors as the ones who clean up the mess -- clear the decks if you will, for a better day. Nothing pulls down a neighborhood or a development more than vacant homes in foreclosure. Buying those homes, getting them in good shape, and getting people living in them is a real and necessary part of the overall market recovery.

Now, as investment opportunities, these homes may well represent some unique problems. Homes that have been empty are more likely to have suffered some kind of vandalism or other crime. Home systems, like plumbing that have gone unattended, could be damaged or in need of repair. Pools are generally concrete swamps after a month or two with no care. If the family has been living in the home and has had to get out quickly, you may be looking at the unhappy task of throwing away what they left behind.

In almost all cases, there will be necessary repairs and cleaning. But that's generally true of any residential property you pick up. Foreclosures are just a little harder to stomach because you know someone just lost their house against their will. But, hard to stomach are not, they are a viable investment opportunity and one you should consider. They will likely be newer homes and are often well placed in terms of location.