The rise in New Orleans foreclosures is quite depressing for homeowners but not for investors. Increase in foreclosures in Louisiana from January 2009 to February 2009 was 40%, which was far greater than the national average of 6%. But the rise in foreclosure properties is extremely attractive for investors because of the availability of these homes at much lower price compared to the current market value.
It is however essential to mention that a big increase in foreclosures can hurt the economy of a state and real estate market. It is due to this particular reason that you have to check if investing in New Orleans foreclosures will really be a profitable venture or not.
In order to get a right conclusion, you have to spend a lot of time in studying the latest market trends, especially the median price. As median price can have an impact on foreclosures, following graph is taken from Trulia.com to help you understand the trend in recent years.
The rise and fall in median price is there right from the beginning of 2002. Though you can see an increase in price was there in the first quarter of 2005 but the fall in price was bigger than the increase in following years. In the first quarter of 2005 the price was around $230K whereas the price in the 2nd quarter of 2008 was around $92K. You can see the higher decrease in price was there from 2005 to 2008.
The median price for Dec 08 to Feb 09 was $99,000, which was a decrease in the median price as compared to the same period in last year. The decrease in the median price was around 3.3%. This analysis was based on the sales of 814 homes in New Orleans.
Now, the decrease in the median price should be seen along with the number of sales for which following graph is quite helpful.
This graph, which is from Trulia.com, shows the change in number of sales from 2002 to 2008. You can see that there was a decrease in number of sales in the first quarter of 2005 and that’s was the time when median price was going up. After this point of time, number of sales was quite stable until 2008 when number of sales came down a bit. However, there was also a decrease in number of sales from Dec 08 to Feb 09, which was around 60.2%.
So, it can easily be deduced that changes in real estate market are there and if you really want to make a good use of New Orleans foreclosures, you have to conduct a research.
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Written by Alex Rolim.
