According to a new study by the Nevada Realtors Association, 87% of foreclosures were from owner occupants, not investors. Although this may be startling to some, it tends to make sense. Lending to real estate investors wasn’t nearly as loose as it was to owner occupants. I remember owner occupants being able to get 100% loans with a 560 score, recipe for disaster.
In Memphis I know of a couple big investors that had 50+ foreclosures definitely impacting the market significantly. On the owner occupant side that would have had to be 50 individuals. So I’d be interested to see the stat of the number of people that foreclosed. When an investor goes under it seems they take big numbers with them, although it seems rare that real estate investors are going under. At least the ones I personally know.
Maybe the fallout of all of this hasn’t been fully realized. The number of investors defaulting may still peak as many were fueled by the continuous purchasing which has dried in the last 6 months. Also a lot of investors were banking on cash out loans which are now near impossible to find. Despite all of this I think the news is encouraging. I’m hoping banks will take notice and loosen up on lending for investment homes.
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