In a May 20, 2008 article in Washington Post, it was reported that the Northern Virginia county of Fairfax is creating a program to help offset the county’s current mortgage crisis and prevent neighborhoods from declining in value and attractiveness. It is a program that county officials want adopted in order to address the needs of workforce housing so that middle income Americans can achieve ownership during this down time in the economy. If you are a first time home buyer, this means that you could be eligible to purchase a foreclosed home at a cut rate. This will even save buyers even more money since the county will fix up these abandoned homes before they sell them to first time home buyers. The reasons why this below market price purchasing opportunity is one that cannot be passed up is:
- You actually get to see the house instead of purchasing a foreclosed home through an auction. These properties might also have unforeseen expenses such as damages and back taxes that are outstanding. Foreclosed homes are bought anywhere from 10% to 50% below market value.
- If you want to buy the house as an investment, this may be a great time to get in since investors might try to capitalize on this opportunity and buy these below market price properties to rent.
- Virginia is a great place to buy foreclosed homes. Laws allow you to get these houses even if your credit score is less than perfect.
- The U.S. Congress is working to pass the Foreclosure Prevention Act of 2008. If this is passed, people who purchase a foreclosed property will qualify for a $7,000 tax credit.
As foreclosure signs continue to pop up in beautifully built and affluent neighborhoods across the Virginia suburbs, houses that once cost well over a million dollars are now falling to lows that have not been seen in the 21st century. Agents predict that the number of this type of homes will continue to rise throughout the year as foreclosures continue.
Skeptics who believe that the Fed is going to bail them out before more people foreclose better think again. In a Wall Street Journal article last month, it was reported that the State Foreclosure Prevention Working Group, comprised of banking regulators and 11 state attorneys general, found that 7 out of 10 homeowners who are seriously delinquent on their mortgage payments are not on track to receive any kind of help with their payment troubles. Put simply, the rising number of loan delinquencies is far outpacing the increase in loss mitigation efforts by lenders. If a suitable housing package is not passed by Congress before the November elections, this could mean that the market could be flooded with more affordably attractive houses.
The media keeps asking, where the silver lining is? Well these storm clouds have yielded one and there is a lot of optimism out there by those who passed up buying a house three years ago, because they could not afford the artificially created prices of that time. Sellers should sit up straight and realize that a foreclosure crisis is often equated with a buyers market.