June 14, 2008
Housing Crisis: Is Now the Right Time to Invest in Real Estate?
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Here's a collection of posts from the blogosphere recently that look at the housing / mortgage crisis and whether it represents a good time to invest. I recognize that this crisis represents a lot of heartache and pain for many people and do not wish to make light of that, however as investors we must consider whether now is a good time to buy.
Will We Know When The Market Turns?
If you think that the market is going stay where it is you will have no trouble finding the data to support that prediction. What usually happens in any market, stock, bond, commodities, etc., is that the markets turn without very many …
California Housing: Buy One Home, Get One Free! Really!
Posted By:Diana Olick. If you buy one of Michael Crews Development’s luxury homes, priced at around $1.6m, you get a 2000 square-foot cityscape row-home worth $400000 for free. The luxury home is in San Pasqual Valley, the row-home in …
Just as April’s sales data was the best in months and provided some encouragement for real estate agents, the month’s huge foreclosure numbers offered more ammunition to housing market bears who see San Diego County’s housing recession …
Phoenix Real Estate - It’s a Sellers’ Market for Bank Owned Homes
We now have a sellers’ market in the REO world - 4,054 active listings with 910 closed sales over the preceding 30 days adds up to an absorption rate of 4.45 months. Five to six months is considered balanced, anything under is a sellers’ market.
Record Foreclosure Rates Could Mean Cash in Your Pocket
With the mortgage crisis in full swing, homes are going into foreclosure left and right all across the country. In 2005 there were 850000 foreclosures, with the number of foreclosures increasing…
Housing Market Situation Spiraling Out of Control
The sheer proportions of the foreclosure situation, which has seen the rate of foreclosure surge by 65% in the past year, are leading many to predict that the worst won’t be over until 2010. All signs are pointing to the fact that there …
Real Estate Outlook: Forecasts from Top Bank Execs
Speaking at a private financial conference in London last week, some of the top executive of America's biggest banks were moderately upbeat about where we're headed in housing and mortgages.
Number of Foreclosed Homes Keeps Rising
By JAMES R. HAGERTY June 2, 2008; The number of foreclosed homes owned by lenders continues to rise despite signs that they are increasingly willing to slash prices to sell those properties. Lenders and investors in mortgages …
Wilmington, NC (PRWEB) May 20, 2008 — If you've been contemplating that second home, condo, or permanent vacation, experts say now is the time to buy real estate. In April 2008, American Express Publishing and the Harrison Group's Annual Survey of Affluence and Wealth in America revealed that 77% of the wealthiest people in the country believe real estate is a "real opportunity" now. Forty percent said they plan to buy …
Did These Buyers Get a Deal?
The LA Times real estate section on Sunday carried a story about a surge in sales of bank-owned properties, primarily in the Inland Empire. Prominently featured were Aimee and Cory Brown, who snapped up an REO in Murrieta.
Through the floor
From Economist.com - America's house prices are falling even faster than during the Great Depression. AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons.
A few closing thoughts:
- Remember the fundamentals: do your research considering supply vs demand, invest rather than speculate, let the numbers guide you, and make sure you have a foundation of cashflow to support your investments (now more than ever).
- The question of whether it's a good time to invest depends, in part, on your strategy. eg. now is a time for buy and hold investing rather than flipping.
- Foreclosures equate to higher rental demand. In other words, all these people that have been losing their homes are going to need to rent from someone.
- A crash of this magnitude is not common which suggests it is a unique opportunity. There is a lot of noise in the discussions surrounding this topic. For some clarity why not tune into what a few respected experts are saying?
- Prices may not recover immediately but if you invest so that cashflow will allow you to hold an under-valued property it may be a very good long term investment. Finding wholesale priced property is certainly easier now than during a seller's market.
- It takes a very clever investor to time the bottom of the market perfectly - don't let that freeze you up; give yourself permission to act either side of the bottom. Invest based on strategy, numbers and fundamentals rather than perfect timing.
- Don't treat all markets as one large market with the same dynamics. There are still good places to invest and other not so good places. This tool may be of interest - www.markettimingmaster.com/webcast
- Don't assume all houses are undervalued. Do your research.
- Don't lose your head - FUNDAMENTALS!
Filed under Acquisitions, General by Scott Roemermann
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Housing Crisis: Time To Invest In Real Estate? | The Long List of Odysseus Medal Nominees | Realtors and real estate, mortgages, lending, investments @ 6:34 am
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Great post, Scott. Thanks for the links to keep me busy.
Re: two things you said… 1) "Don't treat all markets as one large market with the same dynamics." — couldn't agree more. Excellent point we tend to forget with the "sky is falling" frenzy. 2) "now is a time for buy and hold investing rather than flipping." — I only agree to an extend. But consider that you could carve a nice profit flipping properties wholesale to the buy-and-holders right now. And I know investors who are still killing it in rehabs — they're just doing it carefully and with more precision. This market actually requires SKILL and an INTELLIGENT APPROACH. …jp
Yeah, fair point, JP.
I guess I was making a sweeping generalization myself… but I'm typically writing for the brand new investor - trying to guide them on fundamentals and also towards the low-hanging fruit.
Excellent points. People are afraid from the current "market in crisis" but they should understand that these are the exact times to find opportunities. Here is an article written by Mark Z. that provides a clear and simple example for the opportunity in down market http://www.realestateproarticles.com/Art/1067/267/Buying-Up-In-A-Down-Real-Estate-Market-Is-A-Wise-Choice.html
Just got back from writing an offer for a client on a foreclosure in Queen Creek, Arizona. It was a new home back in 2005. With the pool and landscaping, total cost was around $300,000, now it is listed for $169,900. I'll be surprised if there are not 3 - 5 offers within the next 3 days, obviously going for more than list price. There are buyers out there and they are finding good value.
Very nice point "5. Prices may not recover immediately but if you invest so that cashflow will allow you to hold an under-valued property it may be a very good long term investment. Finding wholesale priced property is certainly easier now than during a seller's market."
This is what usually happens in that scenario and as investor this is good time to invest on for long term.
Remember to not catch a falling knife. Your cashflow can be better if you buy after the market has recovered instead of catching a falling knife.
Well said GO Zone. I think people are jumping in when they have no idea yet whether or not the market is going to stabilize. Best to wait and see in my opinion.
I hear the question all the time if it is the right time to buy. It is area sensitive. for instance, there are great areas to buy property in niche markets. As cheap as FLA is right now, there is going to be another adjustable rate boom that will decline values further. Can you imagine a newer home in FLA for $50,000?? Believe it because you will see it soon
really nice post Scott, what make me really a bit shock is Buy One and Get One house, that is really crazy offer. I've never such an offer in my city.: O
I think people have plenty of time to buy real estate. Investors have to stop being so emotionally attached to the "immediate need" to succeed.
The posts are really helpful to open our eyes to the housing crisis. We can learn from the articles about how to avoid the crisis in future. This crisis is really hampering all the sectors. Hope to get out of it soon.
If you have the money to invest and cash flow to cover mortages it is a great time. I would not want to buy some property and worry about how i am going to pay for it but if i had the income and do not mind waiting for market to come back now is the time.
I'm seeing quite a few investors coming to the table that are clearly keen on this point you made:
"A crash of this magnitude is not common which suggests it is a unique opportunity."
Great post. Some of us are considering real estate cause its almost a bargain now, but so many people are saying different things. Your links will help maybe answer my questions.
I believe it is time to buy in certain markets, but not all. I think it is a great time to buy Florida moreso than Arizona and Vegas.
Great article. I keep telling people.. a failing economy only means you need to reposition yourself to stay in profit mode. To many people think its time to batten down the hatches. You just need to find a way to make it work FOR you instead of against you. Thanks for the read
Article is a little old, but from the time you wrote this to today is certainly a better time to buy. We are in historic times right now and there will be a lot of millionaires made with this crisis. Too bad everyone can't take advantage of it as cash is king!
I think this is just a temporary “blip” if you will on the way down. I sincerely believe this bubble is like all others - we are going down back to where we started - 1999 prices. Option ARM and Alt-A resets have already started resetting…and NOW we are hearing that 75% of those getting loan mods (at taxpayer expense) will default again within 12 months. unemployment has to stop accelerating for this cycle to end, imo.
No matter where we are in the market I think it always goes back to the basics if you want to make money in real estate. If its a long term play and the property pays for itself and makes you a profit then its a no brainer long term keeper. If its a flip then you need to be into the property at 60 cents on the dollar minus repairs and you need to cash out within 90 days to realize a profit. I think its crazy to speculate in any marketplace especially with high end properties. So is it a good time to buy? I think its always a good time to buy if you don't go against some of the basic fundamentals of real estate.