The Brookings Institute is out with some interesting data regarding foreclosures in the market through September 2009. First, they ranked metro areas by the number of REOs per one thousand mortgages. You can see on the following map what we already knew to be true: the highest levels are in the Southwest and Southeast — where all the red and orange dots are — and the lowest rates are in the Northeast — blue dots. You can see that Syracuse, NY had the lowest level of REOs where Las Vegas had the highest.
A full listing of the top 100 metro areas is located here.
They also published a similar map showing where the largest changes — positive and negative — occurred in the levels of REOs. Here is the map for that:
The locations with the highest decreases in the levels of REOs were in California. In fact, nine of the top ten decreases were in California. The largest increases were in the Southeast with six out of the top seven metro areas being in Florida. The full list is located here.
There’s a ton of information here but what leaps off the page at me is that the market seems to have turned in California. Buyers — many of whom are investors — have poured into the market and are snatching up foreclosures as quickly as they can. I’ve heard this from our California brokers, usually in the context of how difficult it is to get a first time FHA buyer into a well priced foreclosure where an all cash investor is the competition. In a downturn, it is usually the investor who establishes the bottom. When they begin to buy, prices and rates of sale begin to improve. It’s also true that real estate trends often start in the West and sweep Eastward. In other words I see this as very positive for all of us.
I also see how important it is to know your market before you make your plan. If you are in the Northeast and are reading about the prevalence of REOs, it would be wise to do a careful analysis of your specific market before you devote time, energy and money to tackling this business. You may discover that REOs are not much of a factor in your town. If you’re in the Carolinas — which are pretty blue in the first map and pretty red in the second — I think you might consider gearing up for and increase in REO business.