The unprecedented collapse of the U. S. housing market since 2005, is it opportunity or does more risk lie ahead? In our daily Profit Confidential e-letter, we regularly comment on the U. S. housing market, offering our real estate advice. Is it time to buy real estate? Where are housing prices headed? In 2005 we begged our readers to exist the U. S. housing market. It was the best real estate advice we ever offered. Today, we regularly follow housing prices in major American cities, foreclosure rates, interest rates and the home building stocks to continue offering our readers timely real estate advice. If you are thinking about buying a vacation home, invest in rental property or simply looking for the best time to make your move in this market, look to Profit Confidential for timely real estate advice. There is no doubt in my mind that the real estate market has bottomed out. I’m in Miami this week trying to pick up some “deals” in this recession-hit-hard town and I’m starting to see some changes in the marketplace for real estate. I want my dear readers to be aware of two important changes in the property market: – While there is still a glut of property (condos and vacation properties) on the market, prices have stopped declining because foreign buyers are in the marketplace buying up the deals. Florida and Arizona, in my circle of associates, are the places real estate investors are buying in. – The bank-foreclosed deals and properties about to go into foreclosure (also known as “short sales”) are being bought by investors with cash. No financing. When you see cash buyers that usually signifies patient money that believes now this the time to buy. Cash buyers often do not have the pressure to sell. When cash buyers come in, it is usually a signal of a bottom in any market. In Florida, the more inland you go (away from the ocean), the more prices for real estate have dropped. It is common to find inland property selling at half the price it sold at during the property market peak in 2005. There is a glut of product and cranes still stick through the top of unfinished condo buildings.
But, slowly, these depressed properties are being taken up by investors (or people looking for vacation homes) who are taking the “I might never see prices like this again” attitude. While I’ve given my readers two important positives for the real estate market in the U. S. , if you are planning to jump into this market, I also want to give you three warnings: – A great number of homes in the U. S. (that have not been foreclosed on yet) are worth less than their mortgage. At any point, these homeowners might cave in and walk from their homes. That would put more product on the market, softening prices again. – Interest rates cannot stay low forever. Once the Fed starts to tighten, which the majority of economists believe will happen in late 2010 or into 2011 (barring an inflation surge), real estate prices will come under pressure. In general, property prices rise when interest rates fall, and property prices fall when interest rates rise. Yes, the bottom might be in for property prices in the U. S. But, because of huge inventory overhanging the market, prices may stay at the same level they are today for many years to come. So, if you are looking to make that real estate investment today because of depressed prices, you will need the patience to wait several years before those prices move back up again. As the old adage goes, “Patience is friend of the investor, enemy of the speculator. ”

Posted in Buying Real Estate | No Responses »
Tags: Advice, Best, Estate, Investors, Real