Over the past few months the media has scared Americans away from investing in real estate. Lenders were closing there doors left and right. Fans all over were being smeared with excretion. As time passes on, the tightening of the mortgage market directly affects real estate as a whole. The end result has positive and negative affects.
Let’s start with positive affects. As markets tighten, buyer pools decrease. In direct correlation, prices decrease as well. The tables have now turned. Two years ago, seller’s had buyers lining up outside there door in bidding wars. The seller no longer has the upper hand. The buyer now dictates the deal. The average time a property is listed prior to sale has more than doubled in recent history. Now when an offer is made, we are dealing with sellers scared of losing a potential buyer. The outcome is strongly in the buyer’s favor.
Over time, the real estate market shows a consistent trend. It goes up, and it goes down. This very simple theory has made people million and billions of dollars. When do you buy? The obvious answer is when the market is down. We happen to be in a very good down market. Why do I say this? Well, in the past, i.e. the 1980’s, the market was down but people were getting 30 year fixed loans at 17%! Today, you can still get a 30 year fixed loan at 6-7%! The government realizes the real estate crisis we are facing and have made changes to help sustain activity. Mid September the Fed was lowered by ½ point. Fannie Mae has expanded their guidelines to help more people qualify for loans. Action is being taken.
Where the market sits today is an extremely attractive time to invest in real estate. There is potential to buy properties well under market value and the ability to finance the transactions is still readily available. Talk to your realtor and see what is out there. This is how people get rich! Now is the time to BUY, BUY, BUY!
In the state of Florida (and throughout the nation), residential real estate developers have hit a wall. Due to the smaller pool of qualified buyers and the media telling the world that no one can get a mortgage, they are left with an excess of inventory. Yet, these developers borrow from banks who still want their money every month. When inventory stops moving, carrying costs become excessive. So what is the end result? Extreme discounts! Many developers are selling units at cost or even below cost to avoid foreclosure. What this represents to the world of investors is an opportunity to get into property at COST! Once again, BUY, BUY, BUY!
As I mentioned there is a downside to all of this. Many people out there took advantage of the mortgages made readily available to anyone that wanted one. Many people got 100% financing without showing a single document verifying income or assets. Many people were in 2-5 year ARM’s that are now starting to adjust. Their payments are shooting through the roof. These people call there mortgage broker or lender in today’s market and are immmediately shunned away. Their home is now appraising for 20k less than when they bought it. They owe the bank more than what the property is worth.
Even for people that put down 10-20% that did NO DOC loans, now go to refinance and are finding out they don’t qualify to refinance because they do not have the necessary documentation to qualify.
The downside leads to an excessive amount of foreclosures. This can be looked at in a positive light by the real estate investor as potential to pick up properties at discounted pricing directly from the banks.
In conclusion, the current real estate market is an ideal time to BUY, BUY, BUY! There is no investment more secure than buying “bricks.” When the market’s down, it really only has place to go – and that’s up! Simple yet effective.
