Regardless of the area of The Keystone State from Pittsburgh to Beaver, Reading to Doylestown, West Chester to Harrisburg, Media to Lancaster, Allentown to Norristown and Philadelphia or any city or town in between, Pennsylvania is similar to all other states in the nation when it comes to foreclosure homes. Since the sub-prime mortgage crisis that started a global economic meltdown Pennsylvania has suffered from homes that where over valued several years ago when every resident of the state could qualify for a subprime mortgage and the housing market was edging ever closer to the brink of disaster.
After the disaster struck and home prices began to plummet throughout Pennsylvania lending restrictions tightened and qualifying for a mortgage in today's market has become far more difficult causing a further depression in the value of homes. This depreciation which is beyond anyone's experience has been made all the worse by banks and lending institutions selling foreclosed homes at reduced prices in order to clear their books of the troubled assets.
Foreclosures are in no short supply in Pennsylvania. The state ranks as the 29th in this dubious honor. The lower than average number of foreclosures is due mainly to Pennsylvania's incredible success after decades of economic growth and diversification. The total economy of Pennsylvania has been ranked as the 18th largest in the world while the total area of the state is less than half of the national average. Unemployment in the Pennsylvania is a reflection of the healthy and diverse economy of the state with an 8.8 percent unemployment figure which is 10 percent lower than the national average. This is good news for real estate investors and foreclosure home buyers as the ease of resale or rental depend heavily on the ability to qualify which requires employment.
Pennsylvania is the chosen headquarters of 50 Fortune 500 companies. These companies are an indication of the commercial base of the state which is extremely diverse. Ranging from the Steel and food production to the financial industry, Pennsylvania is less prone to depressions in the economy than most states and its residents show this as the population continues to grow at a time when many states have seen a population decrease while their citizens flee to states like Pennsylvania.
Pennsylvania has the 22nd highest household income in the country which should lead to the further expansion of its industrial base as few states offer a skilled forces combined with a diverse economy and above average wages. This combination allows for employers to grow without the financial weight of other states such as California and New York which have shrinking industrial and manufacturing sectors to add to their economic troubles.
Foreclosures still remain high in Pennsylvania as a result of the mortgage meltdown and will continue to register in record until the subprime mortgages have been purged from the financial system through refinance, resale or foreclosure. This is good news for foreclosure home and real estate investors that qualify for a mortgage or pay cash for foreclosure homes.
The gross state product of Pennsylvania is over 550 billion dollars with such commercial icons as Crayola Crayon Company, Heinz and PNC Financial Services anchoring the state economy.
The largest private employer in Pennsylvania is Walmart followed by the University of Pennsylvania and the Philadelphia International Airport. Foreclosure homes in and around economic drives and job creators provide a better bet than average opportunity for quick and profitable resell.
With the higher than average household income and an unemployment figure currently resting at 9% the adage of "location, location, location" has never been more important to follow as an absolute rule. Metropolitan areas have a somewhat higher percentage of unemployment but for real estate and foreclosure home buyers this is more than made up for by the overall population count. Resale is an important variable when investing in a home for resale or rental purposes as carrying costs can run as high as 10% of the foreclosure homes value.
So what do you do if your home is not going to foreclosure in Pennsylvania? You should be buying homes that have gone to foreclosure. Buying as many homes below market as your credit can withstand. Why buy in a down market? Buying in a down market instead of timing the market at its lowest point will allow smart investors to buy more foreclosed homes and rent them out or reselling before buying additional foreclosure homes and repeating the process. The thousands of people that lost their homes and those yet to lose their homes will require a home to live in and provide their family shelter. This new real estate market is where the greatest boom in recent history in Pennsylvania will come from. The greatest wealth opportunities are also in this time in our history. If you are not in the foreclosures home buying game, get in the game.
Buying foreclosed homes in communities outside of metropolitan areas may require a degree of additional patients in order to locate a foreclosure home with an adequate degree of equity. Once purchased the foreclosure home will again require patience as resell buyers and tenants are more easily found in the more metropolitan areas and more difficult the more rural the area.
As the real estate market continues to reset itself and prices continue to adjust and mortgages continue to adjust upwards, an increasing number of residents of Pennsylvania will lose their homes by merely walking away from what appears to be an untenable financial position. If the average home in Pennsylvania has lost 5 to 15 percent of its value, then the average mortgage will take 3 to 5 additional years before it starts to regain its value and only then begin to build its first dollar of equity.
This negative equity position which many home owners find themselves in, sometimes referred to as "Being underwater" or "Upside down" on a mortgage is motivating more and more residents to stop paying their mortgage as the insult is exacerbated by injury when the mortgage rate is adjusted upwards and quickly becomes unaffordable.
Q. Foreclosure buying opportunities will continue as interest rates adjust on thousands of subprime mortgages that were taken on homes while downward pricing pressure eliminates the possibility of refinancing. Experts agree that this perfect storm of foreclosures will increase over the next several years. So what do you do to take advantage of the current real estate market regarding foreclosure?As for now the real estate market continues to improve and an investment in a foreclosure home today will reap higher rewards in the near future. Recent government initiatives have also created an environment which has placed the majority of the blame for bad loans on banks and removed the financial stigma of being foreclosed on. Thus we will see more foreclosures until the employment improves nationally and locally. Buying foreclosure homes now will prove to be an incredibly wise thing to have done in 18 to 24 months.
