Tulsa Foreclosure / Bank-Owned Market Update


For the very first Home Finders blog post, I thought I would relay some important and up-to-date Tulsa foreclosure market / investment property information. For months now, many of our investor clients have been wondering where all of the bank owned inventory has gone. From 2010 – 2013 Tulsa had an excellent acquisition market. In fact, I wish I would have had more investor interest in buying bank owned inventory as properties were selling at a deep discount to market values and projected rates of return were very high. Now investor interest is high but inventory is low.

So what happened to all the Tulsa bank owned properties?

Let’s look at some statistics. Here is a graph of foreclosure numbers for the Tulsa MSA. As you can see, bank owned listings are down nearly 40% from a year ago. Good for the Tulsa housing market in general, bad for Tulsa real estate investors looking for bargains.

So I went looking for answers. Why did the number of bank-owned properties decrease so dramatically in such a short period of time (beginning fall of 2013)?

The answer wasn’t long in appearing. In fact, I found the answer in my own neighborhood. You see, there is one house in my neighborhood that I have driven by every day for nearly a year. You may have a house like this in your neighborhood. You know, the one that everybody drives by and says “that’s a shame”.

This particular property, a nice full-brick 4 bedroom 2 bath home built in the mid-2000’s has a large section of the roof missing (mold, anyone?), the garage door is off the tracks and sits at about a 45 degree angle to the ground, the yard is knee-high unless the neighbor mows it, etc. Yes, it’s that house. The eyesore in the neighborhood that I live in.

The funny thing is, the bank secured and winterized the property months ago as evidenced by the tell-tale signs taped in the windows. So I wondered to myself, “why doesn’t the bank just foreclose already?” A quick search on google revealed the answer:

Check out Slide 13 of the Black Knight Mortgage Monitor for May 2014

Bingo. With home prices rising, the banks have apparently decided it is advantageous to allow delinquent homeowners to stay in their homes. Perhaps they have calculated that they are better off losing the mortgage payments and allowing the value of the property to appreciate. I would expect this trend to continue, at least while housing values are rising.

So what does that mean for Tulsa real estate investors?

Expect less foreclosure / bank owned inventory to be available with prices on Tulsa bank owned properties rising accordingly. In our recent experience, banks are expecting to receive close to asking price on REO assets. Even with a slight increase in prices, Tulsa investment properties are still attractive enough to generate sufficient returns. Investors will need to be a little less aggressive with their offers and may have to be a little more flexible in their search criteria if they want to acquire additional rental units. Other strategies we are pursuing include purchasing investment properties from other investors and small multi-family properties such as duplexes and triplexes.

Thanks for reading. I hope this information has been useful to you. If you are looking to invest in Tulsa real estate or need property management in Tulsa OK, Home Finders can help. Call 918-665-0212 today for more information.

Regards,

Nate

 

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