‘Foreclosed’ for Some Translates to ‘Opportunity’ for Others

The recent housing crash seems something like a modern-day “Trail of Tears.” Millions of Americans forced out of their homes for failing to make payments on assets they couldn't afford to begin with or can no longer afford because they have lost their jobs.

It is a tragedy whose plot line is lived every day by thousands of Americans. The suffering inflicted by short sales and foreclosures on a daily basis is incalculable.

Thankfully, it appears that the acceleration in foreclosures has finally stopped and that the trend is reversing, even amid an economy bleeding jobs. This is in no small part attributable to to the savvy investors and  first-time home-buyers who have put a floor in the market by absorbing housing inventory through real estate auctions.

More bearish market commentators claim that recent good news in housing and foreclosures will be undermined once banks fully disclose the number of foreclosed homes they own – homes which haven't yet come up for sale. They will be proven wrong. Recent attendance of real estate auctions – whether virtual or in-person – is at a record peak. In fact, some housing experts argue that recent signs of price improvement in certain markets is attributable to the high demand for homes that is being witnessed at these auctions.

And why shouldn't there be high demand? Prices in many desirable areas have fallen more than 50% from peak to trough, putting rental yields on properties – hard assets – well above the yields investors are homeowners might find on bonds, which can't be lived in.

Urban condominium properties in particular represent a compelling opportunity for buyers or investors. First, urban markets are most likely to benefit in an inflationary environment, as foreigners purchase second and third homes to take advantage of a weak dollar.

Second, urban areas will experience an accelerated recovery versus other areas, as urban center will likely fuel  the job creation that puts the economy back on track.

Third, prices in some cities like Miami and L.A.  have been hardest hit because of the tremendous short-term overcapacity built by developers who now need to exit their projects as quickly as possible to make their own bondholders whole again. And fourth – call us partial – urban markets may just be more fun to live in.

While the recent downturn in housing has had a negative impact on many peoples' lives, there are signs of real improvement. This improvement is provided by the once-in-a-lifetime opportunity for buyers to scoop up plush penthouses at bargain basement prices.