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House Buying Takes Off in Foreclosure Markets

As home prices fall to their lowest level in many years, new homebuyers are buying their first homes and investors are acquiring foreclosure properties for rent and resale.

In the cities of Lathrop and Stockton in California, which are two of the hardest-hit by foreclosures in the state, home prices have fallen to a level that are enabling people with average salaries to afford buying homes.

One example is single mother Christine Amy who was able to buy a two-level four-bedroom house for only $166,000. Before 2008, Amy would not have been able to afford even a small house, but after losing on out on other low-priced homes to cash-ready individual investors, she was finally able to take out a bank loan to buy her first home in Lathrop. Amy said that the house is in good shape unlike other foreclosed homes she has seen. According to her, many were totally ruined and unlivable.

Amy’s realtor Jim Muthart said that the $170,000 home price level has been the basis of most investors in Central Valley in buying a home for resale and rental. Among them are farmers, retirees and doctors who want to cash in on the low home prices. According to foreclosure analyst Sean O’Toole, home buying has been a better investment alternative in the Stockton area in comparison to stocks and certificates of deposits.

Muthart has also noticed a significant development in the housing market: renters are turning homeowners while homeowners are turning renters. Many hope that home prices have already bottomed out so that these new homeowners could maintain their monthly payments and not suffer the fate of foreclosed house owners.

Nothwithstanding some bright signs in the housing market, real estate agents are still concerned about the entry of additional foreclosed properties into the market in 2009, after foreclosure moratorium measures imposed by the state of California have run their course.

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