House Foreclosures: Bay Area Foreclosed Houses and Investors

December 17th, 2007

About a fifth of the houses that have gone into foreclosure in the Bay Area were bought by investors. Israel Medina is one among many who thought that investing in properties in this region would bring in fast rich dividends. Today 11 of his properties in North California has slipped into foreclosure within the short span of a year. From a real estate tycoon today he has become Mr. Nobody.

Analysts say that random investing is one of the causes of California leading in foreclosure figures. There are no tears for the real estate gamblers who during the housing boom bought houses at the snap of their fingers as if they were peanuts. When the market betrayed them foreclosures clamped down upon them.

In Bay Area 6,557 properties were foreclosed. One fifth belonged to investors. In this region 18 investors had five or more foreclosures to their names. The source of their purchasing power was no-questions-asked easy money from sub-prime loans.

While the investors are shrugging it off as bad speculation the neighbourhood is paying with pain. But not all are callous business personnel. A working class couple in Livermore bought four units in the hope that profits would steer through their children’s education expenses. Another woman, Rose Hodges, residing in Marin put in $1 million in four estates relying on the words of a construction agent that these could be fixed up and sold at a profit. She lost her money, her credit credentials as well as her own home. Rose had not initially acted impulsively. She had attended educative courses in real estate investment before diving in. There are many like Rose who had inherited money from their parents and wanted to make good use of it.

Most of the houses foreclosed today had been bought yesterday with negligible down payment. Some totally relied on loans while about 12% contributed towards a down payment. Only 10% of the borrowers paid out of their pockets the standard 20%. In this Bay Area 80% of the houses now under foreclosure, had been bought with loans taken during 2005 and 2006. Those with multiple foreclosures account for 80% of the total, 56 persons have 3, 13 have 4 and 18 have 5 foreclosures to grapple with.

The get-rich-overnight speculators flooded Las Vegas and Miami but the Bay Area was relatively free because of steep real estate prices.

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One Response to “ House Foreclosures: Bay Area Foreclosed Houses and Investors ”

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December 17th, 2007 at 4:23 pm

Last month we too had bought some houses which were on foreclousre and i guess one should reserahc well even in such trades as some times you can be in gret loss while buying forcloser

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