An examination of the figures shows that the real estate market is far from normal. Distressed sales totaled more than 1.2 million last year, a 25% increase from 2008 and a more than four fold rise from 2007. They made up 29% of all sales last year, up from 23% in 2008 and 6% in 2007. The average foreclosure discount was 25% in 2009, 22% in 2008 and 26% in 2007. ‘A normal market would show foreclosures accounting for less than 2% of sales
Fewer countries report an increase in distressed properties coming to market in Q3 than in Q2;
Property professionals in more countries are seeing growing enquiries into distressed listings from specialist funds
The outlook for future distress picked up with more countries seeing rising distress expectations compared to Q3
US and UK report greater levels of distress, whilst Russia, Hong Kong and Brazil report falling levels
Properties in default or scheduled for auction sold for an average discount of almost 15%, up from almost 14% in the previous quarter and down from 16% a year earlier. These homes are often sold in short sales, where lenders accept less than the outstanding loan amount for the property. Sales of properties either in default or headed for auction accounted for 12% of all sales.
If you are a private investor, looking to take advantage of the current market conditions for property investment, you have some cash to invest and you are seeking hugely discounted or distressed property sales that will give you cash-flow positive high yields, large future potential price gains or both.
Discounted Property Investments:
Highly discounted new-build developer stock and resale buy-to-let properties - apartments and houses
Access to bargain overseas investment properties from distressed or highly motivated sellers/ developers
High Yield Property Investments:
High income student investment property - new-build private halls of residence and traditional housing - the recession proof sector
High income UK holiday lets - a smart and tax-efficient investment and the top performer for the last decade.
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