There are some states in the United States that improved in 2013 in the amount of foreclosure filings. Banks and lenders have yet to file public information about the 2014 year although there have been decreases reported in foreclosures over the past year. The decrease in foreclosure filings can mean a lot to investors. The unstable market between 2008 and 2012 increased fear in investors planning purchases of properties.
How Reductions in Foreclosure Rates Helps Investors
Savvy real estate investors keep a close eye on the foreclosure rates in cities where investments are owned. A downward trend in foreclosures can have many positive effects for property owners. This condensed list is a portion of the benefits of reduced foreclosure filings in the real estate industry.
1. Positive Market Outlook
A large percentage of stocks are tied to the real estate industry. Failures in the housing market can affect the stock market and investments that investors make. The recently reported decrease by RealtyTrac of foreclosures down 15 percent in November, 2013 provided a positive outlook for the future of property investing. Investors who have fear of loss in the market can be more eager to invest when the market is positive again.
2. Increased Demand for Rentals
The foreclosure process that a homeowner goes through can take years before a property is vacated. This means that some homeowners remain in a home longer than expected. Homeowners who have completed the process of foreclosure and are unable to obtain a mortgage help to fuel the market for rental homes. Because foreclosure can affect personal credit ratings for up to 7 years, most people with less than perfect ratings of credit can seek rental homes.
3. Possible Rent Increases
A stabilized real estate market can signal signs of economic improvement. Economies that grow each year typically provide increases in property values. Neighborhoods that are performing above average could contribute to a rent increase. Investors who own property in growing neighborhoods can benefit from a rent increase to boost annual earnings from an investment property. Rent price increases are often discussed each year with property management companies.
4. Less Market Competition
Investors in the real estate industry who purchase and resale properties often seek foreclosures due to the below market prices. Obtaining a home for a fraction of the original selling price provides opportunities for profit for foreclosure investors. The decrease in foreclosure filings creates less competition between investors due to the consistent buying in growing markets. Investors who already own investment property could reap the rewards of less competition in the marketplace.