Regardless of the area of The Volunteer State from Nashville to Chattanooga, Knoxville to Clarksville, Murfreesboro to Memphis and Jonesborough to Franklin or any city or town in between, Tennessee 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 Tennessee 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 finally struck and home prices began to plummet throughout Tennessee 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 Tennessee. The state ranks as the 18th in this unenviable honor. The higher than average number of foreclosures is due mainly to Tennessee's incredible success after decades of economic growth and diversification. The total economy of Tennessee has been ranked as the 18th largest in the nation while the total area of the state is less than half of the national average. Unemployment in the Tennessee is a reflection of the overall condition of jobs in the country as unemployment figures in Tennessee is roughly identical to the national average. Tennessee reports unemployment at 9.4 percent which is only slightly less than the 9.7 percent nationwide figure. 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.
Tennessee is the chosen North American headquarters for many of the worlds' best known have companies such as FedEx, AutoZone, Eastman Chemical Company, Nissan and Volkswagen. These companies are an indication of the commercial base of the state which is extremely diverse. Ranging from manufacturing based in Franklin to the entertainment based in Nashville, Tennessee has metropolitan areas that generate over 226 billion dollars in gross state product.
Tennessee 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 such as Tennessee which offers a greater opportunity to find a job and adequate housing. Many less economically diverse states post population figures that have experts concluding that their economic health will be a concern much longer than Tennessee and therefore the immigration to Tennessee will accelerate in the coming years.
This expanding population is good news for real estate investors and foreclosed home buyers as the ease of resell are greatly enhanced with a growing population.
Further good news for real estate investors and foreclosure buyers in Tennessee is illustrated in that Tennessee has the 41st highest (or 9th lowest) household income in the country which leads to the further expansion of its industrial base as few states offer skilled forces combined with a diverse economy and below average wages. This combination allows for employers to grow without the financial weight of states such as California and New York which have a very expensive hiring pools to draw from and therefore a shrinking industrial and manufacturing base to add to their economic troubles.
Foreclosures will remain high in Tennessee as a result of the mortgage meltdown and will continue to register record highs until the subprime mortgages have been purged from the financial system through refinance, resale or foreclosure. This is again good news for foreclosure home buyers in general and real estate investors in particular who are positioned to qualify for a mortgage or pay cash for foreclosure homes.
With the lower than average household income and unemployment resting at 9.4% the business adage "location, location, location" has never been more important to follow as an absolute rule. Metropolitan areas of Tennessee have a slightly higher percentage of unemployment but for real estate and foreclosure home buyers this is more than compensated for by the overall population count of areas like Knoxville, Memphis and Chattanooga. 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 Tennessee? 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 Tennessee will come from. The greatest wealth opportunities are also in this time of high foreclosures and increasing population for Tennesseans. 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 patience 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 Tennessee will lose their homes by merely walking away from what appears to be an untenable financial position. If the average home in Tennessee 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?
A. Buy foreclosure homes now! Read more about how to buy foreclosures and educate yourself on the communities you are most interested in buying a foreclosure and start shopping here for the foreclosure home that meets your needs. If you are facing a pending foreclosure call a local real estate professional and determine what types of options you have. Your options will depend on your particular situation. Variables that should be considered in the state of Tennessee include where a home is located, density of that areas population, which can vary greatly in Tennessee, how much is owed on the home and how much the particular home is worth in today's market.
Q. Does the lower number of foreclosures mean that there are too many homes already for the population?
A. No, Tennessee has been and will continue to be a destination for skilled, well paying jobs compared to the cost of living and innovations that are yet to be seen. Tennessee has a very strong economic base. Residence will always need homes and a good investment today in a down market will result in a better upswing in the future.
Q. Has the average home in Tennessee lost more of its value than in other states?
A. No, the entire housing market has seen a down turn in prices and Tennessee is no different from every other state in that regard. The one difference is that Tennessee is more diverse economically, has a lower cost of living and has a highly skilled workforce. This is all good news for the Foreclosure investor in the state.
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.