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Invest in Triplex Foreclosures in LA Before Prices Shoot Up

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By : John Cutts    99 or more times read
Investors are advised to buy triplex foreclosures and other types of residential foreclosures now before home prices shoot up, as price levels in Los Angeles and in other parts of California have been increasing year-over-year over the past months.

In March, the median sales price for single-family houses sold in Los Angeles County was $332,000, a spike of 12.5 percent from the median in March 2009. The median price for condos also increased, posting a 2.7-percent jump to $303,000. The median price for all types of homes in March was $329,000, a jump of 9.7 percent from the $300,000 median in March last year.

Across Southern California, the median spiked by 14 percent from $250,000 in March last year to $285,000 in March this year.

A total of 6,372 housings units in the county were sold in March, consisting of 4,756 single-family homes and 1,616 condo units.

Los Angeles foreclosure investing continues to be viable in terms of availability of foreclosed homes, as LA County posted the highest number of filings in April in Southern California. A total of 3,245 filings were posted, marking a one-percent drop from March. The number, however, was the highest posted by a county in the Southland region.

The decline shows improving market conditions in the county, adding another factor that affirms investing in triplex foreclosures and other foreclosed properties in the area.

Investing in triplex homes has advantages for individual investors: the investor can live in one of the units while renting out the two other units and the price of the triplex is typically cheaper than the cost of three separate single-family units.

One of the signs showing significant price appreciation in Los Angeles is the declining ranking of Los Angeles City in home affordability charts. Based on studies on home values and household income in 451 housing markets in the country, Los Angeles ranked last in the ranking of 52 major metro areas according to home affordability.

With this information, investors need to find and buy low-priced foreclosed homes for sale now as the number of affordable units has been declining fast. Los Angeles posted a house value-income ratio of $9,874 to $1,000, reflecting the $591,700 median house value and the $59,926 median family income in the area as of the latest release of income data.

The most affordable among the 52 large metro areas in the country is Rochester in New York, which posted a ratio of $2,331 to $1,000. In the area, the median house value was $121,300 and the median family income was $52,042.

California cheap houses are also getting harder to find in the major markets, as four of the most expensive major housing markets in the country are in California. In the home affordability charts, Los Angeles, San Francisco, San Jose and San Diego are in the lowest four levels.

Nonetheless, investors can still find triplex foreclosures and other types of foreclosed homes that they can resell at a profit. In April, nearly 70,000 homes were put into foreclosure, in addition to the 216,263 homes that became distressed in the first three months.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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