Where Have All The (HUDs) Gone?

A few months ago, I blogged about the declining number of bank-owned properties available in the Tulsa market. If anything, the trend has gotten worse, particularly the number of available Housing and Urban Development (HUD) properties available. I have represented buyers in the purchase of dozens of HUD investment properties in the last several years, so the lack of available inventory has been a real challenge for a broker who specializes is distressed properties. There are now only a few HUD properties available in each of the suburban areas. For comparison, in 2012 there would routinely be 30 or more HUD properties available at any time in Broken Arrow, a suburb of Tulsa. As of this writing, there are currently 5 available. That would be an 85% decrease from 2012.

The decrease in the number of HUD properties is so severe that I wondered if there was something else going on besides the overall decline in the number of foreclosures. The statistics show that in the Tulsa market, foreclosures have decreased by about 40%. So where have all the HUD’s gone?

I didn’t have to look hard to find the answer. It turns out that HUD recently liquidated $15.8 Billion in non-performing mortgages. These 91,000 loans were sold to institutional investors at about 60 percent of the outstanding principal balance. It is impossible to know what number of these loans were in the Tulsa area, but it certainly could be the cause of the shortage of local HUD properties available.

To be clear, the overall decrease in the number of foreclosures is a good thing for the City of Tulsa, and our national real estate market as a whole. As a result of the sale of the non-performing HUD loans, about 6,400 homeowners were able to stay in their homes. That’s fantastic.

Tulsa area real estate investors will begin to shift their focus from buying bank-owned investment properties to other sources of acquisition. Some of these avenues will include purchasing non-distressed properties in a traditional sale, or even other property sub-types such as duplexes or triplexes. As an investor, the name of the game is staying flexible and moving with the market.

If you would like help acquiring your next Tulsa investment property, we can help. Give us a call today at 918-665-0212.



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