Model Sees Success in Creating Homeownership Opportunities Through REO Sales
New Vista Asset Management, an REO firm in San Diego, said the company's strategy to market REOs as affordable housing solutions for minority and first-time buyers is working.
To date, minority buyers have purchased 66% of its listings and 80% of the sales are owner occupied.
The company is selling properties quickly with overall sales prices tracking at 95% of the original listing prices, which is netting New Vista high marks from its clients. Listings are marketed through a large national network of multicultural real estate firms that have an established presence in minority neighborhoods. New Vista's business strategy is to use owner-occupied REO home sales to stimulate first-time homebuyer purchases and stabilize minority communities that have been particularly impacted by the foreclosure crisis.
"Traditionally, selling to an owner occupant has helped stabilize home prices. Unlike investors that drive down home values by negotiating rock bottom prices, homeowners are willing to pay a fair price. Owner occupants also stabilize communities and fuel local economies with the whole purchase cycle that goes with homeownership and fixer-uppers," says Jim Park, New Vista's CEO.
In a business environment that has traditionally favored investors over homebuyers, industry experts didn't initially give much notice to New Vista's approach. But, as the foreclosure cycle has worsened and the impact to communities has been felt with higher crime rates, squatters and vandalism - the company's strategy and REOs are now being seen as a vehicle to housing recovery. Experts estimate that minorities could account for as much as 50% of the two million properties expected to go into foreclosure.
Under the company's business plan, New Vista is also working with nonprofit counseling agencies in an effort to educate qualified homebuyers about the benefits of buying an REO. Workshops have been well received thus far, drawing standing-room-only crowds. "This is a win-win for everyone in the equation," says Gary Acosta, chairman of New Vista. "Despite the headlines, people still have a strong interest in becoming homeowners and homeownership is well within their reach now that housing prices have dropped in once higher priced markets. REOs are a perfect solution for this group of buyers who were priced out of the market during the housing boom."
Recently, New Vista added Saxon Mortgage to its list of clients. Working with Saxon, New Vista will focus on increasing homeownership opportunities throughout the country by leveraging its REO inventory.
In Washington, NeighborWorks America launched www.StableCommunities.org, a new online information hub for nonprofit organizations and their public and private partners working together to stabilize their communities in the wake of the foreclosure crisis.
It is a national response to the local challenges that arise when foreclosed homes remain vacant and abandoned, including increased crime, an eroded property tax base, and widespread blight.
StableCommunities.org fosters a national conversation among community development practitioners, offering both emerging and time-tested community stabilization strategies to help them develop solutions that are appropriate for their local communities.
"The nonprofit community must work together to transform this crisis into an opportunity to rebuild neighborhoods and create healthy, stable communities," said NeighborWorks America's CEO Kenneth D. Wade.
HUD's recently announced Neighborhood Stabilization Program will inject $3.92 billion in funding into areas devastated by the foreclosure crisis. StableCommunities.org will help prepare practitioners to use these resources while equipping them with the best tools and strategies available to leverage government funding.