Finding Foreclosures:

There are many deals today in the foreclosure market. With rates coming down and banks easing lending restrictions, even investors are finding their way back into the market.

So if you are a bit tired of the stock market and want to diversify into real estate, here are some top areas I’ve identified where you can find deals as an investor in the foreclosure market, and why:

Ft. Lauderdale, Florida. Ranking number 10 in 2007 metro areas for foreclosures, there are deals galore. Companies are literally walking away from newly built condos. So why is this a good thing? Studies show boomers are moving here–and the ones who already live here are staying. This will help prop up this area in four to seven years as more retire, making it a prime area for a rebound.

Seattle area, Washington. While ranking lower in foreclosures (21st in the nation by state), there are deals (10 percent to 20 percent off of the value) in and around Seattle. Interestingly, studies show boomers are leaving Colorado for Washington and Oregon–two states that may benefit as people retire. Also, Seattle
has consistent jobs in the high tech arena that aren’t leaving, making it another great selection.

North Carolina. I love this state! Ranking 18th in the nation in foreclosures, the median price is about $178,000, a 3 percent drop in 2007. This is about the national average, with good jobs and stable incomes. Also, boomers in the South are migrating to
North Carolina from some of the more expensive areas.

For souls willing to brave a bit more risk, here are some areas really battered in 2007 with steep price declines. These are not for the faint at heart and are risky areas, but a small rebound could mean a big return (long-term holds!)

Riverside/San Bernardino, California. Down 17 percent for 2007 (although not looking great for 2008 either–a long-term hold, indeed). Tampa/Clearwater, Florida. Down about 12 percent for 2007, but lots of people are interested in moving here. It’s a great retirement area, and jobs are stable.

Cleveland and vicinity, Ohio. Down nearly 10 percent for the year. Jobs are not quite stable yet, so it’s risky, but a long-term hold may be warranted here. And there are so many foreclosures, you can definitely get a good deal.

Dani

I’m going to go out on a limb here - one I think isn’t so far fetched. I think this is a fantastic idea for a show like Cavuto.

The American real estate market, in 12 months, will have a ripple effect on world real estate, particularly in areas where Americans have been using home equity lines of credit to buy up property. In addition, boomers will once again be able to retire in the US without having to look to South America for property.

Let me elaborate.

Take a country like Costa Rica. A large percentage of their appreciation and sales in real estate has been due to the ability of Americans to buy property there prior to retirement using home equity lines, then move once they retire. In fact these markets have seen such incredible booms in appreciation that they rival most major coastal cities in the states. Growth in construction in Costa Rica alone is above 20% (source); some as high as 40% due to demand from Americans.

More Americans moved to sun-belt states to retire before the real estate boom; Florida first, then other cities like Phoenix and Las Vegas based on US Census data. With skyrocketing real estate prices in the 2000’s, many boomers were unable to afford these areas and they purchased their retirement property in South America, particularly Nicaragua, Costa Rica, Panama, Belize and Mexico. Costa Rica offers an added incentive; no tax on income earned outside the country and retirees can buy into the national health care system! Remax and Century 21 have opened offices in Honduras! The US State Department, as of now, estimates about 380,000 Social Security checks are sent outside the US each month. Almost 4 million Americans, not including the military, ar enow living overseas.

Predictions? Two major changes. First, the South American real estate economy will suffer due to lack of equity in American homes as boomers retire. Second, boomers will once again look to the sun-belt states due to high foreclosure rates and sinking prices and leave the South American options behind.

If there is one bright side to the foreclosure market, it’s the boomers.

Baby boomers were largely unable to move and retire to sunny states like Florida, Nevada and Arizona. While these had been hotspots in the past, boomers were finding themselves unable to buy in these overinflated markets.

However, with the new foreclosure market, excess supply is pushing down price for everyone, including boomers who needed a place to retire. Many are now capable of pulling out the equity in their homes, buying their sun-belt retirement place, and hanging onto their home until the market rebounds when they can sell it and pay off their sun-belt retirement house.

So this foreclosure market has a bright side - a boost for boomers.