Investors Look to Profit
From Others' Misfortune

Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Touring for foreclosed homes

California abounds with bus tours -- to see the sites, gawk at celebrity homes, etc. Now, home buyers and investors interested in purchasing foreclosed properties can board a bus to view vacant homes available for sale, says the San Jose Mercury News.

On Saturday, 30 individuals toured South San Jose, where there are numerous foreclosed homes available, the newspaper says. Among those looking to buy were house hunters looking to purchase their first home and investors searching for a discount on homes that need TLC. The tour was organized by brokers and real-estate agents.

Such bus tours are being offered throughout the state, in which 84,375 homeowners lost their homes last year, Mercury News says. Most of the properties seen on the bus trip were "far from perfect" -- "bedrooms stank of mildew," while at one house, a hole in the backyard sat where a pool used to be, the News reports. However, some participants in the tour saw such flaws as opportunities to negotiate lower purchase prices, the newspaper says.

 Investors sense a deal in Hawaii

As the number of foreclosures grow in Hawaii, there are an increasing number of "buy and hold" investors in Oahu looking to purchase properties at below market value prices and sell them at a later date when housing prices go back up, says the Star Bulletin of Honolulu.

"It's not a matter of if prices go up, it's a matter of when," the newspaper quotes Harvey Shapiro, a research economist for the Honolulu Board of Realtors, as saying. Although median prices for homes and condos rose in 2007 in Oahu, and with the market expected to "hold steady" this year, it's a buyer's market as sales slow and homeowners struggle to sell their homes, the Bulletin says.

California homes turn into rentals

In towns like Mountain House, San Ramon and Brentwood, homeowners are opting to rent out rather than sell their properties, according to an article written by Barbara E. Hernandez of San Francisco-area newspaper, Contra Costa Times. Some are facing high mortgage payments, others, including some real-estate investors, are waiting for a market turnaround, Ms. Hernandez says.

To renters, the homes are attractive because they often offer luxurious amenities and more space than a "cramped apartment," she says. Some looking to rent have lost their own homes to short sales or foreclosure  -- but homeowners interviewed by Ms. Hernandez aren't worried about renting to these individuals if their credit histories are otherwise fine.

"If the only thing you see that's bad is their house payment, these people are victims of circumstance," says one local broker highlighted in the article.

New Orleans -- renovated homes get better prices

In New Orleans, homeowners who struggled against the odds to rebuild their homes after Hurricane Katrina are being rewarded in the housing market upon their homes' resale, according to Kate Moran of the Times-Picayune of New Orleans. 

Many buyers prefer to buy a house in which everything has already been fixed, she says, noting that building codes adopted by the state in 2006 has made it more expensive for homeowners to fix up their properties. On the other hand, other house hunters look to purchase damaged properties in the hopes of getting a home at a lower price, Ms. Moran says.

In some areas, renovated homes now sell for close to what they did before the storm, while prices continue to fall for homes that "were gutted but otherwise left untouched," she says. For example, she notes that in the 70127 ZIP code, prices for renovated homes rose 23% last year, while prices for non-renovated homes increased a comparatively mere 7%.

In the 70124 ZIP code, renovated homes sell at an average sale price of $141 a square foot, while they sold for $158 a square foot before the hurricane.

The exodus of higher-paid professionals from New Orleans has made it tougher to sell upscale homes and home prices across the entire spectrum of the market are expected to soften this year, Ms. Moran says.

Ms. Kim is a senior editor at RealEstateJournal.com.

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