Where have all the bargain priced homes gone?
In 2011-2012, distressed homes dominated the listings and banks were selling these homes at bargain prices to unload their excessive inventories. Buyers who got into these markets have already seen their home values rise, some as much as 20%-30%, especially if they purchased fixers. As most of you know, competition for these bargains was fierce.
Fast forward to 2014 and with relatively few distressed properties to unload, banks are no longer pricing distressed properties at bargain prices. Yes, there are still a few good deals out there, but for the most part, lenders are now pricing distressed properties at very close to real market value, because they can. There are still plenty of buyers out there looking for lower priced homes, but investors and flippers need to focus on neighborhoods in the outer east or west neighborhoods, or in higher end neighborhoods where they might have to pay more for a fixer, but the return on investment can be greater as well. Those properties that are priced very low relative to area values are usually major fixers so often require either for cash or rehab financing.
The good news is that for those who are looking for a residence to live in, buying a fixer in these neighborhoods can present a great opportunity. The actual cost to renovate a home tends to be less than buying a home that an investor has purchased and fixed up. Otherwise, why would anyone get into flipping homes? And the other advantage of course, is that when you do the renovations yourself, you are upgrading the home to meet your needs and your style and building instant equity at the same time.