Investing in a market that is over saturated with foreclosures

[Abdul Jami]

Hello BP,

What does it say about a market that has an abunadance of foreclosures?

Do you invest in such a market or run ?

Thanks in advance ,

Best regards,

Abdul.

[Richard Wormwood]

You need to find the cause. I am not sure how your county records are but you'll need to gain access (hopefully online) and research the foreclosures. There is a VERY good possibility that these foreclosures are what some refer to as "shadow inventory".

Essentially, during the housing bubble a number of banks could no longer foreclosure due to liquidity issues, so they just sat on properties and over time have foreclosed. So there is a VERY good possibility that these homes have technically been foreclosed for years but only recently has the process been accelerated through the courts.

Another possibility is something I found in about five seconds from a Google Search:

Seniors face more foreclosures as reverse mortgages bite back

Home foreclosures up sharply in Massachusetts

Both articles are nearly a year old but foreclosures can linger and continue even a year after the problem starts.

You'll need to analyze your market and determine if the properties you're looking at will move.