It was reported by The Warren Group that the volume of multifamily properties ending up back with lenders through foreclosure auctions has dropped noticeably. 90% of 2-3 family properties went back to lenders in auctions in 2008. To date in 2011 the number has decreased to 73%. On the other hand, mid-sized buildings are seeing a more drastic change. In 2007, 81% of the 3-8 unit buildings put into foreclosure were returned to the lender. In 2011 the number has dropped to 44% with the majority of these properties being bought by investors. What does this mean? These changes reflect a general change in the market according to some. Rental properties are becoming more popular because so many individuals are choosing to rent instead of buy as a result of increasingly difficult finance criteria. As the economy slowly improves it makes investors feel a bit more at ease when it comes to purchasing.
Greg Vasil, CEO of the Greater Boston Real Estate Board, said, “I think if you’re looking at the real estate world in general, the multifamily area is strong and getting stronger. Vacancies are down, and people are looking to do rental projects. There’s money out there for acquisition, so I wouldn’t be surprised if there’s people out there looking at [distressed] properties, looking to make deals, because they see a healthy rebound coming on the rental side of things.”
While the fact that third-party investors are purchasing buildings that are no longer being cared for is a positive thing, many are concerned that this will eventually evolve into the return of house flippers. If you’re interested in purchasing a multifamily property, contact a seasoned real estate company such as High Rise Boston to discuss your housing needs.