The Current Real Estate Market is Prime for Investing

“it will help bring about changes that will put more power back into the hands of the buyers and sellers rather than in the hands of the real estate agents.” Yes I completely agree with you that this is the pick time for any body to go for a real estate property, because they will get the lowest rate possible.

The fact that sophisticated and experienced investors are finally seeing the “value” in the distressed assets and notes means that we actually might be near “the bottom.” Of course the reason the prices are making sense to the investors is becuase the holders of the notes (i.e. the construction lenders) are finally getting real and slashing the “market value” of their assets so they can get them off their books and move on. Regardless of how we get there, when prices make sense to the “pros” then maybe we are truly nearing a bottom.

New investors know to address what has been a major concern for potential buyers in the failing high rise buildings; that being the financial instability of the Home Owner Associations of those buildings. You see, even with low prices, buyers have been hesitant to be one of the first people to buy in a building that might be failing. After all, if you are one of only fifteen owners in a building and the developer goes bankrupt, who pays the electric bill, the water bill, maintains the elevators, etc? The answer is most likely the lender will pay the bills. But what if the lender goes under. Then I guess the answer is that whoever takes over the asset will pay the bills. But do you really want to have to worry about all that? I know I don’t. So, again, the good news is that the investors who will by up these assets will come in with enough capital to bring the HOA’s into the black.

Some of the investors will rent the condos out while others will seek to slash prices and sell out quickly. In either case it will mean lower prices for consumers. Lower prices will result in purchases.

Over the last several months we at WeKnowUrban have seen a major uptick in buyer inquiries. This, plus the coming lower prices and assurance of solvent HOA, leads us to think that we’re are about to see improving sales numbers in the high rise and loft condo market. So, hang tight as you read “doom and gloom” stories about entire high rise buildings going under. Because now you know the good that will rise from these events.

The market remains in favour of buyers. If one has money now and wants to invest in housing then this is a good time. They can get the best value for their money.

The situation in the high income residential market sector is quite different. There are many vacant houses and few people seeking either to rent or purchase.

Currently the buyers in this market almost dictate the terms of purchase. If the optimism in the market is converted into tangible economic activity and there is influx of new investors then this market will benefit.

The middle income market is quite active although the activity is far from optimal. The real incomes of the group that is attracted to this sector has not increased. The tax burden on this lot is still heavy.

Another explanation to this is the lag period that is expected after a change in economic factors before any tangible effects are recorded in market activity.

There are a number of great deals available in just about every market. The banks do not want to hang onto these properties. This does not mean they will give them away, but there is a good chance you purchase an investment property below market value.

In the Fort Worth market we are starting to see a slight turn-around with buyers. They are coming back slowly but surely. The tax credit has helped some. Hopefully when the market stablizes soon and the government will get all the kinks worked out.

What the person from Tempe said is true – sophisticated investors need to jump in. I don’t want to see a bunch of amatures jump in. They are part of what allowed the huge run-ups in values in some markets.

The reason the investors aren’t jumping in like they were over 3 years ago is becuase they don’t exist in the same capacity. The majority of so called “investors” were people who worked normal 9-5s and jumped in when they found out they could get an “investor loan” on what they thought was a good deal. Many seasoned mortgage brokers will tell you the same thing. This certain demographic contributed greatly to the bubble and the crash.

The amount of “true investors” is down significantly when you take that demographic out and we are seeing that now in the market place. I guess it will be interested to see if a new type of real estate investor is created after this economic storm ends.

As we get closer to the bottom. It becomes a no-brainer for just about anyone left standing in this landscape. With tons of people left with no alternative but to rent it makes for a negative “perfect storm” of events!

The next 2-3 years a lot of money will be made in real estate! Who cares if the values have 10% lower left to go.
Buy location! Think – Where will people want to live! What is this home near. Its time to act!

Funny how – when listening to the mainstream media – we rarely hear about the current buying opportunity that exists in this market. The fact is that in some cases the banks really *are* giving the properties away! Case in point: I was instructed by one of my seller’s mortgage holders to “drop the price $10K every week until the property sells”. This is not a strategy, folks. It’s an attempt at liquidation! With all the hysteria surrounding the real estate market, I think everyone with a retirement account should be seriously considering diversifying into real estate.

Funny you should write about this. I have been telling all of my friends that now is the time to get into the market. If you wait for the media to inform you that the market has bottomed out you will already be too late.

Thanks for this informative write-up. I would say that investing real estate now needs more caring consideration than before. The new aspects that got associated with old conventional issues to be considered are job security and alternate use of newly bought property.

I agree that we might be seeing a bottom of the markets for some areas across the country, but investors should be extremely careful in areas that had seen extreme appreciation because they prices might still have a little further decline before it stops.

For example in Las Vegas in 2003, you could have purchased a 2500sq.ft new construction for $220k, fast forward to 2007 and the same homes where going for $500k. These are the same homes that are declining in Las Vegas, Nevada now.

I’ve been waiting for a market like this. Philadelphia real estate is undervalued for the 1st time since 2003. If you have the ability to buy and hold this is a great market. Now if they would make investor loans a little easier to obtain life would be perfect.

I agree that most of the “investors” were simply speculators. The great thing about today’s market is that you don’t just have to invest in your backyard. Just ask Jeff Brown. We are at a place where you can move your money to where the action is (specifically why I am moving my RE business to Phoenix).
Appreciation should always be the icing on the cake. Your investment needs to make sense if it never appreciated. The beautiful thing is that there are plenty of markets in the US where that is the case.

I foresee a time in the not so distant future when guys are sitting around at a cook out bragging about the deals they got in 2009/2010. FL, AZ, CA, NC – Great places with great deals right now.

…..well totally left out TX. TX is prime for investing as well.

I totally agree with this post. I live in San Diego and write a blog on the topic of San Diego Property Management and I too sense a bottom to the market. I think we’ll bounce around for the next 6-12 months then return to long-run average on 2-4% average annual price appreciation. Also, I’ve heard that banks are either holding on to foreclosed home in anticipation of increasing prices or are selling their portfolios to Chinese investors. Now is the time to get in.

No offense, but I don’t think that we’re at the bottom yet; every month the market gets increasingly saturated with foreclosures; over 200,000 foreclosure filings last month alone; until less foreclosures are on the market and unemployment goes down (the unemployed don’t buy homes) I think that things aren’t going to turn around. I wish they would, though. Well written article though, and yes, this is a great time to find a beautiful home for very, very cheaply.

I think the cliche that real estate is local is definately true. While I don’t think New Jersey is at bottom, I do think Southwest Florida is. It busted so fast that homes are so darn cheap right now that even someone on a $20k fixed income could afford. Inventory levels dropped from 33 months to 13 months in one year. Prices are stagnating and not getting cheaper. Condo market is a different story though

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