Bank Lien Homes and Foreclosed Apartments Hit Louisville in 2010

by Peter Vernon on cities

The year 2010 is not a very good one for the real estate market of Louisville, Kentucky as the city suffered from huge number of foreclosures, with bank lien homes, foreclosed apartment buildings and major commercial foreclosures weighing the city's real property market down. The area is set to end the year with another major apartment property foreclosure.

One of the Louisville foreclosures for sale that has entered the 2010 docket, but will be available for auction in February, is the Valley Farms apartment complex. The property is a 160-unit structure and lending firm Wrightwood Capital Lender is expected to get over $14 million from the auction. Valley Farms will just be one of several big commercial property foreclosures in the city in 2010, with properties ranging from hotels to subdivisions to rental homes to shopping centers.

What worries analysts most about these foreclosures is that, like most Kentucky bank foreclosures during the year, they are part of the portfolios of investors who are considered well-capitalized and investment-savvy. In addition, the residential properties lost by developers were part of the collateral they had put up. Some real estate observers have estimated the collective worth of these commercial foreclosures to be over $300 million.

For a city like Louisville that is not as big as other metropolitan areas, the loss is heavy. Analysts stated that the foreclosure of Valley Farms symbolizes the condition of the commercial property market of the city and how bad foreclosures and bank lien homes have hit the area. They explained that the problem with the area's commercial real estate market is rooted in the financial crisis.

A lot of the million-dollar commercial projects got foreclosed because they failed to get the final financing they needed once market values declined, analysts stated. Most banks in the area have reportedly stopped lending to developers once the market plummeted and most of the big properties ended up getting offered to buyers looking to buy foreclosure for sale for a much cheaper price.

Analysts have stated that 2011 might not be much different than 2010, with bank lien homes and commercial foreclosures likely to be present in high levels in the city. They also stated that for most of these cases, it is as much as lack of financing as bad timing.

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