JAN 4, 2012

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REO Reality

Better Schools Equal Fewer Foreclosures For Sale


When a potential homebuyer is looking for a house, many variables are taken into account, but generally “location, location, location” are the top three.  This becomes an especially important consideration if the family involved has children who will be attending public school.  Homes in school districts with the most generously filled coffers and highest ratings are always in demand, despite downturns in the real estate market.

With the widespread onslaught of foreclosures there were very few neighborhoods not touched by the housing market crash.  According to data collected by RealtyTrac, Inc., there is a direct correlation between a falling percentage of foreclosed properties owned by the banks, or REOs available in a given market and exemplary school ratings.  “Higher rated school districts also maintained higher home sale prices, and higher prices per square foot.”

REOs do exist in these neighborhoods, but because there are fewer of them available at any given time they do not cause the price compression experienced in other lower rated school district areas.   REOs are sold quickly with little or no discount depending on the level of distress of the assets. These neighborhoods may be the only bastions of real estate stability, so, when existing homeowners decide to sell their homes they may very well get their asking prices. 

During the height of the housing bubble frenzy purchases were made by parties primarily concerned with getting what they thought was a fool-proof investment.  Their children, if they had any, may have been too young to be affected; secondly they may have assumed they could sell their homes in a year or two and move into something more suitable for their changing family profiles.  Home purchasers were so swept up in the intoxication of readily available loans and the dream of owning a home that they failed to look at a home purchase as a long-term investment.

As new potential homebuyers cautiously enter the marketplace their perceptions are much different than those who came before them who purchased in haste.  Households may find themselves as tenants for a longer period of time and when they do purchase will seek out those areas with the best schools and consequently the most stable and resalable markets.

Comments (4)
God, I feel like I sholud be takin notes! Great work
Posted by LnDMyJDJVFYua | Sunday, January 15 2012 at 5:22AM ET
More posts of this quality. Not the usual c***, plaese
Posted by wxqEFpddznXydvwUznk | Monday, January 16 2012 at 11:43PM ET
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