Investors looking for a bargain property would do wise to pay attention to the sticker price and not the hype. A new study by Trulia found that properties listed as bargain buys in nearly half of the country’s largest markets are actually nothing of the kind.
“To no surprise, we found that not all properties listed as bargains are actually a good deal,” said Trulia economist Ralph McLaughlin.
In fact, Tulia found that properties described as bargains are actually listed for appreciably lower prices in only 55 of the 100 biggest U.S. housing markets. Whereas there are some genuine bargain markets‒‒particularly in the South and Midwest, which Trulia loving dubbed the Bargain Belt in a December report‒‒several markets throw words like “bargain,” “value,” “deal,” “under-valued,” “fixer-upper,” and “underpriced” around rather loosely for Trulia’s tastes.
Perhaps unsurprisingly, seven of the 10 least bargain-friendly markets are along coastal areas on the West Coast and in the Northeast. The Riverside/San Bernadino, California market, one of the country’s fastest-growing market for millennial buyers, offers the worst discount on bargain properties compared to median prices, a mere 2.1 percent. That means that in a market where the median home price is $310,000, bargain-hunting buyers will save just shy of $6,500.
Similar non-bargains exist in Seattle, Washington and Portland, Oregon, as well as in Orange County, California, and Montgomery-Bucks-Chester County, Pennsylvania.
However, investors and homebuyers looking for actual bargains can still find them in Trulia’s Bargain Belt, where discount properties are on average 10 to 20 percent less than median sale prices. Best bets for actual bargains, according to Trulia, are in Dayton and Toledo, Ohio, where, on average, properties marketed as discount investments come with 19.6 percent and 18.1 percent markdowns, respectively.
In real numbers, that means that buyers could save roughly $20,000 off the median sale prices, which hover around $112,000. Other markets with above-10-percent discounts are Knoxville, Tennessee; Buffalo, New York; Omaha, Nebraska; Baltimore, Maryland; New Haven, Connecticut; Camden, New Jersey; Madison, Wisconsin; and Fairfield County, Connecticut.
“The B-word gets thrown around a lot in real estate,” McLaughlin said. “But talk is cheap.” And clearly, not all properties follow suit.
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