Has the real estate market hit rock bottom? In some areas you would think so, where the market is so awful that buyers can grab homes for as little as $2,000.
There are a dozen listings in Flint, Mich., for under $3,000, according to Realtor.com. There are 22 in Indianapolis, 46 in Cleveland and over 700 in Detroit. All of these communities have been hit hard by foreclosures, and most of these homes are being sold by the lenders that repossessed them.
Foreclosures have literally turned banks into property management companies. It is often cheaper for them to give these homes away rather than try to get market value for them.
Nationally where the median price for a home has fallen more than 7% just this year according to the National Association of Realtors, home prices are more affordable than ever in Butte County of Northern California.
In Oroville, Calif., there are 131 homes for sale under $150,000, with 50 of them priced well below $100,000. Take one home on Roseben Avenue for instance, listed at $50,750. It’s a fixer-upper with 1020 square-feet, 2 bedrooms and 2 baths built in 1921. It's a nice place, but it needs a total rehabilitation inside - estimated cost between $15,000 and $20,000. But that’s not bad considering this home sold for $160,000 in late 2006, and there are dozens more just like it.
With prices this low, lenders aren't looking to make any money on these deals. They just want to get these houses off their books, so they don't have to bear the cost of maintaining them and paying property taxes. In fact, the $500, $1,000 or $3,000 that a buyer hands-over at closing often goes straight to the real estate brokers as a commission. And often the lenders have to kick in extra cash to make it worthwhile before a realtor even takes the listings.
That means good deals for buyers.
These houses are almost always small fixer-uppers. Wiring, plumbing and heating systems have to be replaced, walls and ceilings sheet-rocked, plumbing and light fixtures installed and new kitchen cabinets and counters put in. Few come with working appliances.
But even factoring in these costs, they're still bargains.
And as the housing crisis drags on, there are more and more of these homes popping up, as lenders try to unload their repossessed properties.
Magalia, Calif., is another area with many incredible deals with 26 listings for under $150,000. On Wood Drive sits a 3 bedroom, 2 bath 1347 square-foot home built in 1992 for $100,000. It’s in need of a lot of work on the inside. But it’s on a nice sized lot and considering similar homes in the area have recently sold for $250,000, this is a great opportunity for first time buyers.
Most of these cheap homes can be renovated relatively inexpensively, and buyers can actually get government help to finance these repairs. The U.S. Department of Housing and Urban Development (HUD) has a special loan program for purchasing fixer homes.
The program, rehabilitation mortgage insurance is available through FHA-approved lenders, was designed to encourage banks to issue a single, long-term loan to a buyer that covers both the acquisition and rehabilitation of a property, according to HUD website.
There may also be grant money available from the $4 billion Neighborhood Stabilization Program, which was a part of the massive housing rescue bill passed by Congress in July, to assist buyers with grants for down payments.
Buying homes like these is certainly a leap of faith; they're generally not in the best of neighborhoods and they're often surrounded by many other vacant and deteriorating homes. Still, some of these neighborhoods may turn around and provide residents with good, dirt-cheap housing.
Indeed, this is a sad time. But it's also a time of opportunity, especially for low and moderate income people.
Posted by, Ron Matz.
Do you have real estate questions? Please contact Ron today.
Ron Matz is a Realtor for Coldwell Banker Ponderosa Paradise, CA. The properties mentioned are result of research using Realtor.Com and the NorthValley Sierra MLS, and are not owned or listed by Ron.