As I finished reading this article published by the New York times it leaves me with a few questions. Many speculative real estate investors are heading to the New York and New Jersey coastlines in search of their next big deal. There are numerous properties for sale that have been damaged from the hurricane. The way I see it is that these investors are helping these communities even though they are purchasing these properties well below what they are worth. The question I pose is that are these investors taking advantage of people in bad situations? Although the prices these property owners are receiving from investors is deeply discounted, I still think the investors are helping these communities rebound. Many lending institutions will not let people take out a mortgage for homes in catastrophe areas due to the risk involved so in my opinion many of these properties that these investors are purchasing would be sitting for a very long time and no one would benefit.
http://www.nytimes.com/2012/12/28/nyregion/real-estate-market-along-coast-upended-by-hurricane.html?pagewanted=all&_r=1&
2 comments:
Jacob,
I agree with the thought that investors could be helpful to communities because of the damage in their neighborhood and some people may want to flee. Nonetheless, I have the same question that you have: are these investors taking advantage of the situation? Due to such troubling times, I feel like people are in such need and looking for help that they may take an offer. I recently watched a news segment on housing situations in New Jersey and a lot of people are arguing that their insurance companies have not been giving money out to members. If true, this could be an added factor to people accepting offers.
I think there are two respective entities to consider. I think it is difficult to argue that the communities overall benefit from investors buying homes in these distressed areas. Buying them raises the value of the neighborhood and values also increase as the investors fix the homes up in anticipation of resale. For the individual home-owners, the question is more complicated. While the investors are getting the homes at deep discounts, this is because the homes and neighborhoods have been destroyed and in need of deep restorations regardless of what investors do. Therefore, I think the investors actions are a positive for the home-owners overall as they will raise the neighborhood values in addition to giving the individual owners the option to cash out now if they do not want to get involved in an expensive restoration.
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