Foreclosure Trends - What is Happening in the St. Louis City Market?

MARKET DATA

Since the start of the year, there has been a downward trend in the number of foreclosure sales and bank repossessions in the St. Louis City market. According to RealtyTrac, St. Louis City ranks 607 in foreclosure activity nationwide. Although the number of new foreclosure notices published, foreclosure sales, and repossessions has declined, the inventory of REO listed properties has increased.

In recent months, the number of new REO listed single family homes in the St. Louis City has dramatically increasedwith an average square foot price between $20 to $40 per square foot according to MLS figures.

At the same time, the number of REO listed single family homes sold has remained steady with an average price per square foot between $25 and $35 per square foot.

Note: The RealtyTrac data includes all residential properties (single family and condos). The MLS data only reflects single family homes and attached fee simple townhouses.

COMMENTARY

If you are an investor looking to purchase single family homes in the St. Louis City market, there are two favorable trends relating to foreclosures and bank owned properties. First, notwithstanding the recent decline in foreclosure activity, there has been an increase in REO inventory. Second, there is now a clearly established sales price trend for REO properties. Notwithstanding these two trends, the purchase of REO properties may not be suitable for all purchasers. Homes with substantial equity or in the best neighborhoods are often purchased as short sales prior to the foreclosure sale or are purchased by experienced investors at the foreclosure sale. The remaining properties often are less desirable either becuase of their location or condition. However, for experienced long term investors with the financial ability to make repairs, these properties may represent a value opportunity to purchase single family homes at discounts average 30% or more off the fair market value of comparable properties.

In addition to foreclosure sales and REO listed properties, there are other opportunities in the current market relating to distressed properties. Here are some alternate real estate investment strategies:

• Purchase of notes and first deeds of trust at a discount from private, non-institutional lenders.
• Purchase of notes and second deeds of trust at a discount from private, non-institutional lenders.
• Bulk purchases of properties from other investors, developers, and lenders.
• Purchase of homes subject to existing deeds of trust from sellers currently in default on their note.
• Purchase homes listed as short sales
• Bid at foreclosure sale.
• Purchase of bank owned properties ("REO").
• Bid at judicial sales including tax sales and sheriff's sales.
• Purchase directly from LRA or LCRA.

If you are an experienced investor and would like to discuss the purchase of investment properties in the St. Louis City market, contact Ryan Shaughnessy at PREA Signature Realty at 314-971-4381.