Use access key #2 to skip to page content.

Rehydrogenated (35.11)

Real Estate Turning Point?

Recs

10

July 19, 2010 – Comments (3) | RELATED TICKERS: ABR

I've been looking for HUD-owned property for sale in Tampa, FL for about 3 years now. Specifally I have been looking for a good fixer upper located in a HUB (Historically Underutilized Business) Zone. HUD financing is ridiculously cheap, and all the repairs can be financed and are tax deductable as well (which can give you a nice little cash boost the first year if you need liquidity).  The down-payment is either 10% or 0% and these houses are usually 20% below market and can be negotiated as low as 30% below market in their first week and progressively get cheaper as they sit unsold. As expected, after the tax credit ended many of these homes sat on the market unsold.

But over the last month something I never expected has begun happening. Newly posted homes are being sold 10-15% above the asking price (which for HUD is the appraisal value - usually a low appraisal) and these houses are being sold the day they hit the market. I believe this could be a very positive turning point for Tampa real estate. Tampa was by far one of the most overheated housing markets during the boom years and I've noticed it to be a great leading indicator for where housing has gone during the bust. Condos in Tampa are a different story (they were worthless cardboard boxes that no one in their right mind would ever want to live in to begin with - they were a scam from the start). But single-family dwellings seem to be getting competitive bids according to my friends in real-estate. 

It's the best sign I've seen so far, I've got my fingers crossed it keeps up.

3 Comments – Post Your Own

#1) On July 19, 2010 at 3:20 PM, Griffin416 (99.98) wrote:

This issue of real estate selling for at or above asking price is not new. There are tons of vulture funds (like the one I'm in) looking to pick up cheap real estate. We keep getting out bid by a large margin. If the price is right or more importantly if the asset is valueable (I mean location or type) the demand far out weighs the supply. I am in the FL market as well as a number of other distressed areas.

Report this comment
#2) On July 19, 2010 at 4:00 PM, chimpcontest (< 20) wrote:

Tampa was actually not as overheated as you think.  I can name a dozen MSA's that were worse.  Have you been to Fort Myers, Polk County, or the Treasure Coast recently?  That is just a few that are in worse shape than Tampa. 

Additionally, in the state of Florida, Tampa is trending better than any other market from a new home stand point and foreclosure standpoint.  If you are looking for areas that are still significantly distressed but offer long term value then focus on East Orange (Avalon Park area) or South Orange County (Meadow Woods area).  These locations have a lot of distress, but are also close to job corridors so that when foreclosures disappear they will pop nicely.  Places like Davenport, Winter Haven, etc.... are in the middle of nowhere and even though you are buying at a deeper discount, the upside could be a lot lot longer.

Getting back to Tampa, I feel it is in a bottoming phase and by Q1 of 2011 you should start seeing YOY price increases in new stock homes built in the last decade.  If you are insistent on buying in Tampa consider Wesley Chapel North of SR 54.  There is still a lot of distress there relative to other areas of Tampa, again I only focus on new stock homes not homes built 50 years ago that need tons of repair

Report this comment
#3) On July 20, 2010 at 12:14 PM, Rehydrogenated (35.11) wrote:

Thanks for the great input!

Report this comment

Featured Broker Partners


Advertisement