None of the above. Too many variables from market to market. At different times in my market (Indianapolis) it could have been either A or B.

A and B.

Interesting question. The optimist in me will answer B-because combined with the opportunity to save on the purchase price, the interest rates are also great. That being said...a series of lower sales will ultimately affect the neighborhood values for re-sale, so it would be wise to plan to hang on to the property for long enough to see the neighborhood recover.

The answer is "a". Traditionally, 1 foreclosure brings the neighborhood pricing down 1-2%. It may be a good time to buy into that market, but only if you are getting a property well below market value.

McLovin Rocks!

I think a good analogy would be when you get a bad sore throat. It's a symptom, and you have to ascertain the cause. That takes observation and number-crunching. There are a lot of things that could cause the situation that you describe, and finding out the reasons could help determine if it was, indeed, a good time to buy.

D> It depends. Isn't that always the answer? :)

I think that one must look at the economic conditions in an area to decipher the meaning of 50%+ distress inventory. If you are in Detroit for example, the overall economic atmosphere and future outlook is not necessarily all that promising.

Certain places that have economies that were heavily defendant on their own continued growth are particularly hurt by the economic downturn and if they don't have other industry, other facets of their economy that are strong, the outlook may not be great.

However some markets may have a strong, long term outlook. Southern California has a diverse economy and although we are hard hit, there are some areas that have 50% or more distress inventory. In some cases, I would say that we've reached an opportunistic time for buyers.

Its BUY OPPORTUNITY! There is money to be made in this market....and opportunity everywhere!

B- buy away and wait for the economy to start going upwards again- it will happen.

I like B best of those choices. But I work with a lot of first time buyers and Investors. They are loving the opportunity in the current market. Of course, it is coupled with AMAZING interest rates. So opportunity is the key thing. Not that it isn't scary, but we have been living fast and loose for years, so this was bound to happen to some extent. It sucks that other problems happened at the same time.

"c" for me - although it means tons of opportunities for buyers - foreclosure inventory means the lending industry was whacked.

Generalizing on a particular market for foreclosure inventory is crazy - although it is also scary for those established home owners in those same areas.

A and B. Be cautious (not only in buying, look at direction of the market & what the city is doing to remedy the situation; also ask how did it get so bad) & take opportunity only if it's a good investment.

I would say "C" as well as it generally doesn't matter. Just because there are a lot of foreclosures doesn't necessarily equate to a crashing market nor one that the buyer has a lot of leverage, though it does create plenty of opportunity in certain markets.

I think it's a big opportunity to buy! If you believe that every market whether it's the stock market, real estate market, etc goes threw cycles history would tell you the people that make extraordinary amounts of money in these downward cycles. I do feel that it could be a scary feeling however, big risks reap big rewards. With this said, the 2 big "if's" interest rates and the job market will clearly determine whether things continually get worse. I am optimistic that we are at the bottom.

A, B, C. Why? See Linsey's answer above.

C.

It the answer is "Both A and B" then by definition the real answer is "C".

Bottom line it there are WAY too many variables to consider before anyone can say that any single factor (such as number of foreclosures) results in any sort of market predictor. It's simply one, of dozens, of factors to consider.

PS: could you add the "subscribe to comments" plugin? I'd love to keep track of what people say on this.

Thanks Jay and will do on the "subscribe to comments" request. You rock my man!

Wow, I am so thankful I haven't seen that in the markets in Metro Detroit where I work. That is my first thought.

I am, by nature, very cautious. The thought someone losing their house upsets me. The turmoil of a whole community in this situation is unbelievable.

There is a definite buyer opportunity depending on the broader economics. People who are losing their homes become renters again. They have to live somewhere. Now is a great time to be an investor.

Linsey and Jay said it best. So A and B, by Linsey's interpretation, or C, by Jay's.

Vegas is loaded with foreclosures, but this doesn't necessarily mean the market it headed for a fall. It might mean the home values inflated too rapidly, hit their peak, and now might be increasing again as listings have, or will, readjust to their correct value prior to over-inflation.

While I would love to say B, C is really the most accurate answer out of the choices given. Depending on the area, and reasons behind the foreclosures, would determine how it affects the market.

It's a great Buy opportunity for those that have the money to invest, and then hold the properties for an indefinite amount of time. If you are buying for your own personal residence, and you love the area and couldn't DREAM of moving away, then it's a great buy opportunity for you as well. But an area that is overpopulated with foreclosures will normally lead to a quick downslide in property values, which affects everyone.

Still, I am at the point that I would love to stumble upon a great foreclosure deal, take advantage of the low rates and enjoy living there while our economy turns itself back around!

Without kids and in my 20s? It's an opportunity provided that the neighborhood showed potential to turn around.

If I had kids, I'd be thinking twice about a neighborhood of foreclosed homes.

The answer has to be C right? There just isn't enough info. My gut would say that it is a good time to buy, but who knows how many more of those actual listings will go further down, or into foreclosure themselves.

B, I would guess. I'm responsible with MY money, so as long as I wasn't planning to sell soon after, why not buy?

B.

-rsh

I thought you wanted me to answer a poll, not do math, what kind of captcha is that... had to break out the calculator for 5+9 c'mon now!!

To your question..... its a buying opportunity.
A real investor would be doing a little research and figuring out which lender had a large hold on the properties in foreclosure and working out a huge discount.
Naturally a smart investor would be buying to hold... get over the get rich quick and flip in a year or 2. Must plan on holding 7+years but a sounds like a steal of a deal opportunity.

Sorry about the hard math Brady. Just trying to stop the spam. I'm going to put a calculator widget in there soon. Thanks for the answer.

I guess my answer is "C" because there are too many other factors to consider.

Depending on the long term viability of an area, the distressed inventory can create opportunities for buyers to get more leverage but you always have to analyze the numbers for each individual home and circumstance.

C. As well...

Each situation bears analyzing for sure. Some foreclosures are great, BUT some are higher than what a motivated seller in a less overburdened neighborhood, will do on a "clean" home with less hassles. Just because a locality seems to have a glut of REO's, doesn't mean it's time to buy there, or that it's still falling.

The competition is strong out there from motivated builders & sellers too, who know what they are competing against. If you just look at REO's, you may miss the easy boat for your client.

Its BUY OPPORTUNITY! There is money to be made in this market….and opportunity everywhere!

Too broad a generalization. What are your buyers objectives is where I start.
If they are looking for distressed property fix for rental, great opportunity. Housing will recover. In the end, foreclosure ratio is just one way of many to look at the market.
Thanks!

D. None of the above

(You know I had to be difficult ;) )

Whether or not it is an opportunity depends on the individual buyer and what their needs and goals are. Which is why the "it's a good time to buy" or "it's a good time to sell" are both silly slogans in my opinion..but 'it's a good time to talk to a real estate pro and see if the market conditions mesh with your goals' doesnt have the same ring to it..

a) Buyer beware - it means that market is headed for a fall

Lean into "a"..but if you're going to buy, buy as low as you can get that offer accepted for...and I don't mean 10-15% off either! Especially if it's distant where you can't or don't even have to look at the place...

I think the answer is "C" In any given market there are submarkets that buck the trend, so it always depends upon the specific property, and the specific deal.

I like Heather's answer, it is certainly a great time to consult with a professional!

It depends on each specific market, which sometimes are as granular as neighborhoods, and the buyer's situation. Each is different and there really isn't a general answer for each specific transaction. Could be A, B or C, or none of the above.

Pull the data, analyze, present and discuss. Lather, rinse, repeat...

Not trying to be difficult, but I have to go with C.

Not that it's a "rediculous" way to look at the market, but foreclosure rates are only part of the equation.

* What's the sample size?

* Are you talking about that city only, or is this happening in the entire metro area?

* If it's isolated to a certain area, why is that? There could be an environmental reason that might mean you should run away from that "buying opportunity" as fast as you can.

* Any number of other variables could be the reason for the increase in foreclosure rates & without knowing a lot more info, it's impossible to answer such a general question.

I like b, but need to realize if there are so many foreclosures in a city, then it will be a while for that city to recoup. The economic impact upon the town will be felt for a while. What does that mean for the home as an investment? For an owner/ occupant it can be a great opportunity. It is all relative to the city, situation, homes. Many are in such disrepair, but there are some which are beautiful.

I have to go with C because A and B are too general of a statement. Too many other factors come into play.

Hmm reading the comments above I see there are many perspectives and lots of right answers. Your questions are to vague because we all know in real estate you can structure a deal in many different fashions and still come out in a closing.

But if forced to only choose one option, I would have to go with C. Just to many variables. To a would be homeowner, they may see the market as a or b, very black or white. But as a professional in this industry we can make many different scenerios work no matter what the market, its our job.

Great way to get folks thinkin' though:)

I agree with Steve. I have to go with C because A and B are too general of a statement. Too many other factors come into play. Also depends on why you want to purchase...whether for a home or investment.

Too many variables involved. What else is happening in the neighborhood?

I too would have to go with C. Too many factors and depends who's buying. Now where did I put my crystal ball?

If you were to ask consumers, you'd most likely get "A" as the answer.

If you were to ask me, I may be cautious of what "A" describes, but I would need more information ("C")to make a final conclusion.

Insufficient Data. I can make good arguments for A, B, C or none of the above or all of the above.

B.S.Ch.E 1970 Cooper Union
M.S.Ch.E 1974 UMass Amherst

Ira Serkes

It definitely can mean "Buyer beware". If you are rehabbing properties the next potential foreclosure sale (soon to be comp) may be 10% under what you just bought your home for depending upon the negotiated terms. Hence, bye, bye, profits.

On the flip side of the coin, if you are a first time home buyer, you found a house you love, negotiated good terms, and took advantage of these cheap mortgage rates, I'd say that looking back in five years (in consideration of many current local market conditions) you will be more than happy that you hopped off the fence and made a move.

The potential scenarios and market variables (as others have stated) are countless which would make it impossible to chose any option other than "C".

"B" - It is a buyer opportunity... & "C" It is rediculous to think it is a reflection of the market... too many variables for the reason of foreclosure to make an assumption of the market.

Sales data required to really know the answer.

The two additional factors you need to take into account are (1) Is the region filled with second homes? and (2) What is the underlying reason behind the foreclosures/dropping house prices? Florida may be a great place to buy now if you are buying investment property/second home. We know why Floriday is struggling. Too much, too fast. Compare that to an area that has similar foreclosure rates but has more primary residences and is supported by a local industry which fails. Even with identical FC rates, I would look at Florida as the opp, but the latter community as the "wait and see".

No...those who say too many variables are marketing mavens, not dealing with their own money.
When the foreclosures have exceeded traditional sales it indicates your notional homeowner has thrown up their hands and determined, locally, that their loss, long-term mind you, is worth the foreclosure. RealtyScoreCard. amongst others, is a joke if they expect otherwise...The RE market is centric to owners/buyers perceptions, the variables and metrics are clear in THIS scenario.