Identifying Distressed Property Opportunities in 2024

Examining the scheduled foreclosure auction landscape towards the end of 2023 provides insights into potential investment opportunities for the upcoming year.

Despite remaining subdued in late 2023, scheduled foreclosure auction data offers a glimpse into markets likely to present distressed property buying opportunities in early 2024.

Nationwide, the third quarter of 2023 saw scheduled foreclosure auction volume still 43% below pre-pandemic levels in 2019. Auction.com, representing nearly half of all properties brought to foreclosure auction nationally, reported this data.

While 2022 witnessed a surge post the pandemic-triggered foreclosure moratorium, the volume plateaued at around half of pre-pandemic levels in 2023.

Key Indicators for Investors:

Scheduled foreclosure auction volume serves as a forward-looking indicator for future foreclosure activity in the next six months. Properties often don’t go to auction in the first scheduled month, with an average delay of 165 days between the first and final auction date.

Distressed Property Pricing:

Despite the relatively low volume, distressed property auctions continue to be lucrative for investors. In the third quarter of 2023, buyers purchased bank-owned properties at 57% of estimated after-repair market value. This represents a 43% discount from the after-repair value, showcasing potential opportunities.

Renovation Adds Value:

Investors like Karina Barone highlight the strategy of purchasing distressed properties, renovating, and reselling at affordable prices. While initial purchase prices are low, high renovation costs are inherent. However, successful renovation can lead to substantial equity gains, benefiting both investors and eventual owner-occupant buyers.

Opportunities by Market:

Markets with higher scheduled foreclosure auction volume in late 2023 relative to 2019 levels may offer promising opportunities in early 2024. Cities like Detroit, Denver, Minneapolis-St. Paul, New Orleans, and Indianapolis exhibit volumes above 2019 levels.

On the other hand, major markets such as New York, Phoenix, Philadelphia, Los Angeles, and Miami still experience foreclosure auction volumes below half of 2019 levels.

As investors navigate distressed property opportunities, Real Property Management Select stands as a trusted advisor and solution provider. Explore the expertise and support we offer to enhance your investment journey.