Today’s Housing Slump Equals Tomorrow’s Appreciation

As a private lender the current falling property values would alarm the most seasoned investor.  Most people are saying this is not the time to invest in real estate.  This theory or rationale has been said throughout time, and has proven itself, in most cases, to be wrong.  This is where having knowledge of the history of cycles in the housing market can make it less stressful and more profitable to invest in real estate.

The housing bubble was going to eventually burst, but of course no one thought it would rupture along with the demise of credit and the economy.  But as with the cycle for growing areas, we have already experienced a sharp decline in property values, then there was a slight rise, and now another decline, (this is pretty much happening as we posted in a previously).  After the slight decline there will be a flat line.  A flat line will be little to no improvement in housing values.  But this will not last; people will begin buying and shrinking the foreclosure surplus, and then finally buying properties from owners not in foreclosure.  The flat line will then become a housing market increasing in property values.

Many have seen the need to be on both sides of the down turn and subsequent upswing.  Buying and holding, and waiting for appreciation will prove to be a more than viable strategy in real estate investing in this current down market.

This is not the time to wait to invest in real estate.

Is the U.S. Housing Market Bottoming out?

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According to Mark Zandi, Moody’s economist the current data is showing that the housing market has not hit bottom yet.  As stated in our last post, the housing market in the more desirable areas will experience leveling out after hitting the bottom, then a gradual increase which will pick up momentum.

We have not hit bottom yet but we are a little closer.  New construction of homes dropped in December, coupled with the existing homes sales rising and eminent foreclosures stalling, all this can equal home prices increasing moderately.  This is actually a false positive of a housing market recovery.

The more stable recovery is to come.

Once all the foreclosure robo-signing is sorted out and no longer favoring lender nor homeowner then the market will finally be back on track for a recovery.  Remember we spiraled into our current real estate slump with the subprime lending now it’s time to right the wrongs. 

If you are thinking about investing in the real estate market visit our website.

Our Turtle Economy

As our American economy is turtling along, the European’s are experiencing an economy of marked growth, albeit small, as our stock market has seen its third bad day in a row the European’s are experiencing positive trade.

For France the growth for the second quarter was from consumerism, for Germany the rise is from exports.  The United Kingdom is also seeing an improving economy.  But most of the economists of said countries seem to be surprised by the improvement in their economies.  Russia’s second quarter finish is also showing growth, so what is happening to the good ole’ USA?

The short answer, lack of consumerism, credit, and jobs our countries biggest economy drivers.

On the horizon, the Federal Government will be making it easier for businesses to have credit lines and tax breaks which trips into hiring and thereby moves into a more robust consumerism economy.

With the new changes in banking and credit lending the economy will continue to experience ups and downs, mainly due to our basic nature as humans, we resist change but change does happen then we adapt.

In the future we will see housing demand being more robust and possibly experience a housing shortage, a shortage which may cause many areas to appreciate considerably.

So now would be the time to invest in real estate, residential and commercial.  The sidelines are full of those that will never take action, but action is required in this economy.  Don’t let it pass you by invest now although things may look bleak a new horizon of improved change is on its way.

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Why Real Estate is a profitable tangible asset for a diverse portfolio: Sunday Morning Thoughts

Although consumers are spending less and new housing contracts have also fallen off, investing in real estate can still be a profitable asset in any portfolio.

We are now in a buyers market with many deals all over the place.  So many deals in fact that no two investors ever actually have to out negotiate each other for a deal.  No need to be one of the first to find a deal, although looking for lucrative deals now which will have considerable appreciation in the future is a better strategy for our current real estate market.

Let’s take a better look at this buyers market.  It has evolved into a buyers market because of the abundance of foreclosures, and even more foreclosures to come.  All the foreclosures are not just from the housing segment.  The commercial segment is now beginning to have the projected foreclosures and will continue to rise.

Currently many people are plagued with the thought of the economy getting worse, which it will with the lessening of consumerism and an increase in bad debts.

To keep the housing market from falling further down the Federal government might extend the homebuyers tax credit until the spring, losing it now will only cause a rapid slow down in home purchases.

With so many housing deals, why haven’t we seen an upward move in the housing industry for purchases?

Simple answer, credit tightening and a larger down payment required by lending institutions.

An investor can profit from this seemingly bad situation by being a private lender.  The purchase agreement would not be for thirty years like a conventional loan, but for a period of five years with an extension of contract if necessary.

This would give the investor a monthly or quarterly payment which more than likely will exceed the interest amount of a CD, money market, or even their current investments.

There isn’t a guarantee of payment but the tangible asset is part of your portfolio.  If the buyer were to not make the payments, in effect disregarding the contract, then the lender could foreclose on the property.

The answer in how to avoid a negative experience is to only hold a loan for a person deserving of credit.  Lending institutions are having money issues and are turning away many good people.

So at this time, in this buyers market, we have banks in money crisis not able to lend, people with 15-20% down payments and stable incomes but unable to get home loans.

Private lending makes more sense than playing the stock market in an unstable economy.

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