Foreclosures are Causing the Market to Correct Itself from the Boom Years

It is not all gloom and catastrophic about the foreclosures – in fact foreclosures are causing the market to correct itself from the boom years. Many are now being able to afford houses that previously they would not have dreamt of owning. There are many who are and will benefit from this situation. Jim Owens of Prudential Woodmont Realty deals only with foreclosures. He discounts the units generally by 10% or 15% in comparison to adjacent properties because of their foreclosure status.

This move is helping the banks to get rid of the extra houses weighing them down. The lenders also escape the onus of making roof repairs, pay taxes and see to the maintenance. Foreclosures are a major reason for the downward curve of the housing market. The median price of residential houses has fallen by 12% to $159,000 last January in Nashville compared to what it was two years previously.

It is relatively less compared with fall on the national level – 27% during the past three years according to Fishery. Nashville had not witnessed any excessive price rise during the booming years, like other cities like Phoenix, Miami and Atlanta.

Owen feels that the situation is making it possible for many more households to enter the localities of Nashville. Few years previously they could not have afforded it. Today he is seeing foreclosures happening in affluent sections of the city.

One lucky couple was Nathan Tierney and his spouse Leeza. They bought a two bed roomed condo having two baths covering 912 square feet in The Bristol in downtown Nashville by paying $175,000. The unit had been foreclosed upon. He had managed to get two loans from SunTrust Banks and did not have to make any down payments. Tierney a helicopter pilot of the army said that the price quoted previously “would have been out of our league.”

Leeza is going to start her own non-profit own and has plans to attend graduate school at Vanderbilt University coming fall to focus on community development. She said, “We knew we were interested in real estate, and if you can find a deal, it’s still a good investment.”

A recent problem is that underwriter standards are becoming more stringent – going back to levels that have not been seen for the last 15 years. Even those with good credit are having to make down payments when proceeding to buy a house. Also they have to prove their income. In doing so they have to pass through many loops in the banking system and that takes time.

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