Half Price Foreclosures Enrich Lucky Buyers

Posted on December 11, 2009

Want a new 2,000 sq.ft home for $145,000? How about a 5 bedroom home for $150,000? Our would you prefer something smaller? How about a luxury 1 bedroom condo for $27,000? You can have it! The same housing downturn that has wrecked the lives of so many Tampa Bay residents has become a once-in-a-lifetime opportunity to buy beautiful homes on the cheap, and buyers who were patient enough to wait until now to buy are reaping the rewards of their good timing.

“One of our clients closed last month on a 5 bed, 3 bath, 3000 sq.ft foreclosure in Zephyrhills for $139,000,” commented Peter Murphy, Home Encounter head broker. “Another client is closing this month on a luxury 2,700 sq.ft Temple Terrace home just off the golf course for $195,000. I’ve never seen opportunity like this – no one has.”

All over Tampa Bay, home buyers are taking advantage of similar deals: a 1,600 sq.ft 3 bed/2bath Harbor Island condo sold November 20th for $180,000; a 2,500 sq.ft 3 bed/3 ½ bath townhome with views of Tampa Bay sold on November 30th for $199,000; a brand new 3,100 4 bed/3 bath in Grand Hampton sold on November 16th for $220,000. Homes that originally sold at $419,000, $457,000 and $385,000 respectively were snapped up by savvy buyers at an average of 48% of their original sales prices.

“What we’re witnessing is one of the largest land-grabs in history,” commented Home Encounter sales agent Chase Clark. “Buyers who have the resources are snapping up quality real estate at unheard-of prices. Beach-front, golf course, river front – it’s all on sale for nearly half of what it would cost you to acquire the land and build the house.”

New construction sales data would seem to reinforce this point. Of all the new home sales in November in Hillsborough reported through the MLS, the average sale price was $208,000. In the same month, 85 newer foreclosures sold in Hillsborough County for an average price of $133,000. That’s a 36% discount below what new homes are selling for in today’s housing market. Even if you assume a boom-time profit margin of 20% on the sale of a new home, new foreclosure sales are still coming in at an average of 10% below what it could cost a developer to buy the land and build the house.

The average price for all listings in Tampa Bay is $283,000 – the average price of a distressed home is $160,000 – almost half price. But if you’re worried these deals might disappear overnight, don’t. 28.5%of all listings – or over 7,700 homes in Tampa Bay are in foreclosure, according the latest distressed sales report from Home Encounter. At today’s rate of sales – and if no more foreclosures come on the market – it will take almost 3 months before they’re all sold.

“When our clients ask us if now is a good time to invest in real estate, we’re telling them yes – absolutely,” commented Murphy. “But we’re also telling them that if they want to wait a few more months to buy, then it’s probably OK – it may be a while before the great deals we’re seeing today go away.”

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The author, Peter Murphy, is Co-Founder and Head Broker at Home Encounter, a Tampa-based real estate Consultancy with specialties in Residential & Rental Properties, Investment Real Estate, Property Management and Land & Commercial Properties. Murphy’s analysis of the Tampa Bay housing market is featured extensively in local media and in trade publications, including the St. Petersburg Times, the Tampa Tribune, the Tampa Bay Business Journal, the Lakeland Ledger, and the Orlando Sentinel. He has appeared on ABC Action News and Bay News 9 for his reporting on significant local developments in the real estate market. He is a regular contributor to Fox’s 970 WFLA news broadcasts and is a guest panelist on Fox 13s “Your Turn”, where he consults on local and national real estate market issues. Murphy has a B.S. in Economics from the University of South Florida and an MBA with an emphasis in Finance, Economics and Marketing from the University of South Florida School of Business. He resides in Tampa with his wife and child.