For two years, Christopher Burkhardt paid close to $750 a month to rent a one-bedroom home in Calaveras County, Calif. Like many renters, the 24-year-old was irritated to spend the majority of his income on housing, without the benefits of home ownership or the equity that can come with it.
"It's frustrating because you're not building [any wealth]," says Burkhardt.
Then, late last year, Burkhardt, who works as a landfill maintenance worker, began researching foreclosure properties online. He'd read about the number of distressed homeowners in his neighborhood -- California is the top state when it comes to homes returned to banks due to foreclosure. The state recorded about 260,000 filings in 2008, according to Foreclosures.com.
This month, Burkhardt plans to move into his first purchased home, a 1,000 square-foot two-bedroom foreclosed property he bought for $126,000 in Rancho Calaveras. His monthly payments will come out to roughly $800 a month, slightly more than his monthly rent, but a far better investment.
"[The home] was probably closer to $300,000 at the height of the real estate boom," says Burkhardt, now his family's youngest home owner. His goal is to stay for at least five years, wait for the market to improve and upgrade to a bigger place. "I'm just starting to build a life basically," he says.
Real estate experts say the glut of foreclosure properties coupled with dropping interest rates is bringing affordability back into the housing market, especially for first-time buyers.
Nearly 1 million homes fell into foreclosure last year, up nearly 64% from 2007, according to Foreclosures.com. And Burkhardt says he easily nabbed a 5.25% interest rate on a 30-year-fixed mortgage. He's hoping to push the rate down even lower. The bank even agreed to pay the majority of his closing costs, he says.