I spoke with an attorney in town today whose firm does a lot of foreclosures in the Oklahoma City area. I asked him if he was seeing an uptick in foreclosures recently. He said there was a small increase in foreclosures, but he expects things to really pick up next year. It is not due as much to the California and Florida bubbles -- although that will contribute some due to the reduction in opportunities for *1031 investments -- but rather due to local market and employment conditions. Both General Motors and the Dayton tire plant (as well as a couple other major employers in the Oklahoma City area) have closed or are closing their doors. As a result, some 5000+ high-wage workers have been or will be laid off and their severance pay is expected to start running out some time next spring.
He told me that he is already also seeing a noticeable increase in the availability of HUD homes that have already been through foreclosure.
He seems to think that I would be wise to wait another year before buying a house in the Oklahoma City area as he expects house prices to drop between 10-20% in the next year.
What that means is that my previous post indicating that OKC home prices seem pretty stable was based on incomplete information.
*Internal Revenue Code Section 1031 is a tool for deferring capital gains tax on commercial/investment transactions. This Section allows taxpayers to exchange real or personal property for new "like-kind" property, while deferring recognition of any capital gains. Section 1031 creates the ability for sellers to defer capital gains on investment property by placing the sale proceeds with a "Qualified Intermediary" for up to 180 days until the closing of the purchase of the replacement property.
You learn something new every day.