Part one discussed the backwards economic forces of the foreclosure market and how cash is king. In part two, we’ll discuss one of universalities of buying a home.
Some things are universal when buying a home. When a real estate agent talks about “location, location, location”, it’s really just a lazy way of saying that research is everything. Yes, in a normal housing market, you’re going to pay more for a good location and that’s all you need to concern yourself with, but we’re not in a normal housing market. Location still matters, but the idea of location is kind of turned on its head. So what you really want to do is research, research, research.
This is the only part of buying a foreclosure that’s actually fun. If you love the city you’re in, this gives you a good chance to explore your city. If you’re doing your research right, you get to learn a lot about the history of the neighborhoods that you are looking at. For instance, the neighborhood that I was looking at was once almost entirely Polish, but in the last few decades the Polish population has moved further northwest and been replaced with a mostly Hispanic immigrant population. They, in turn, have slowly been migrating west and getting replaced by hipsters as prices rose. All that came to a screeching halt, though, when the housing bubble burst.
Now, the neighborhood has lots of distressed housing. Commercial properties are empty, lots are vacant, houses are abandoned and in disrepair. This makes the neighborhood sound really bad, but it actually isn’t. It’s still a good family neighborhood and it’s close to both public transportation and a major highway. It has just hit a rough spot.
So if you have a population trend interrupted by an economic disaster and a good neighborhood hit particularly hard by said disaster, you have lots of opportunity. Yes, it’s still a gamble. Yes, trends may not continue. Yes, the economy must improve to make this worth while. I like to think, though, that it’s all about odds. Odds are the trend will continue. Odds are the economy will improve. And just like you can usually fee pretty comfortable when you’re playing blackjack and you have a 20 and the dealer’s showing a 9, I like my odds.