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Foreclosed House Payment Study Shows Homes Cheaper to Own than Rent in Major Cities

RealtyStore conducted a study to spot check prices of foreclosure listings in some of the most popular major metropolitan areas, and found homes available for purchase at prices that would support monthly payments well below rental rates for comparable homes.

Inventory of REO foreclosures for sale continues to put significant downward pressure on prices, as banks and institutional owners remain motivated to liquidate the foreclosed homes they own. This continues to support selling prices on average at 30% below market values, according to Moody's Investment Services.

The RealtyStore study sampled active, 3-bedroom, 2-bath single-family homes for sale in 8 metropolitan areas. Interestingly, the net average monthly payment of the houses in the sample was $369/month. While many other homes are available at prices above this level, surprisingly, many other homes could be found for even less.

Low priced foreclosed homes in Detroit, Michigan offered the best values in the study with a $224 monthly house payment. Chicago, Illinois foreclosures and Dallas, Texas foreclosures also offer 3 bedroom homes in the $200 category. All other markets studied revealed considerable bargains with foreclosed homes available at prices low enough to under cut rental rates in the metro areas.

The sample listings of either bank-owned (REO), FannieMae/FreddieMac foreclosures, or HUD homes for sale in these popular markets breaks down as follows:

City, State
Payment (P & I)
Detroit, MI

$224 per Month

Chicago, IL
$281 per Month
Dallas, TX
$289 per Month
Atlanta, GA
$323 per Month
Los Angeles, CA
$507 per Month
Oakland, CA
$447 per Month
Orlando, FL
$363 per Month
Phoenix, AZ
$377 per Month

Below are more details taken from the listing descriptions of the sample foreclosed homes for sale:

Atlanta, GA: REO foreclosure in ZIP code 30345 priced at $57,400. 3 bedroom, 2 bathroom in 1,248 square feet and full basement.

Chicago, IL: $49,900 asking price for a Fannie Mae foreclosure in ZIP 60639. 2-story home of 2,048 square feet with 3 bedrooms, 2 baths, vinyl siding and three parking spaces in rear.

Dallas, TX: 3 bedroom, 2 bath ranch HUD home listed at $51,500 in ZIP code 75217. Features 1,696 of living space with wet bar, wood burning fireplace and fenced yard.

Detroit, MI: Fannie Mae foreclosure for $39,900 in ZIP 48224. 3 bed, 2 bath 2-story brick home in Gross Pointe Manor. Last sold for $192,000.

Los Angeles, CA: $89,900 list price for an REO bank owned home in ZIP code 90022. Great family home with 3 bedrooms and 2 full bathrooms.

Oakland, CA: REO foreclosure in 94621 ZIP code. Assessed value $115,865. Foreclosed at transfer value of just $79,500.

Orlando, FL: $64,900 asking price for Fannie Mae foreclosure in ZIP code 32818. Spacious 3/2 home with ceramic tile throughout, inside laundry, and near shopping, schools and restaurants.

Phoenix, AZ: REO foreclosure in ZIP 85051. Spacious 3 bed, 2 bath property featuring pool. Foreclosed transfer value $175,137, now listed for sale asking $62,900.

A survey of rental rates in these metropolitan areas revealed market prices up to and exceeding twice the monthly payment amount, to rent a smaller 2-bedroom house.

Monthly payment amounts were calculated using a fixed, FHA-insured loan with a 3.5% down payment, fixed 5.75% annual percentage rate (APR) and a 30-year term. Monthly payments reflect principle and interest. Insurance and property taxes extra.

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