Real Estate Investing

I do not have a degree in macro-economics, trigonometry, accounting, investment, banking, financial prowess,  matrix algebra, or computational data analysis.  I am not an economist.  I am an outsider looking in at the massive amount of statistics that determine the national housing index. 

What I do know is that my cell phone has begun ringing again.  I’m getting calls from both people I know and those I’ve never met asking about buying property.  Several months ago, my calls were from sellers who were nervous and scared about the value of their homes going down the tubes.  Today my calls are from buyers who have figured out that yes, the percentage rates on loans are incredibly low and yes, home prices may have hit bottom.

This renewed interest in home buying seems to be playing out on the national real estate market, as well.  Real estate guru and senior editor of Realty Times Blanche Evans is reporting that the falling prices of homes are leveling according to the real-time housing index.

Days on market have gone down from 122 in February, to 119 in March to 111 in April, which is also a positive trend. Miami and Detroit experienced the longest days on market.  Austin, Texas, sold homes the fastest at 67 days on market.

That means it’s time to carefully watch inventory build-up. It’s spring so it’s natural for more homes to come on the market, but it’s begining to look like some markets may have bottomed in February.

When we see the market hit bottom, it has but one direction to go… back up.

The best part is that the buyers who are now calling are smarter.  They are talking to lenders before asking me to drive them around exploring neighborhoods and walking through houses.  Their agents are performing the neighborhood comparables to be sure the sales price is fair market - today’s market not last year’s.  This puts buyers in a really good position to negotiate for a great price and it’s a relief for homeowners to be finally able to sell and move forward with their lives.

Here’s an overview wherein some agents agree the market has hit bottom, while others are not so Mary Sunshine about real estate.

Naples Real Estate Blog: Market Hits Bottom!

(Wisconsin) Real Estate Market Hits Bottom: See the Numbers!

The Housing Crisis is Over? Not in Phoenix

The Gory Details of Real Estate: A Bell Will Not Ring When the Market Hits Bottom

It reminds us that all real estate is local.  Just because one area of the country may flourish, another may still be facing hardship (but it will get better!).

The news media is all over a story today from Fannie Mae reporting that homes are falling in value to 9 percent this year, 2 percent lower than the first-anticipated 7 percent freefall.

The bad news is perception is everything. When the news only reports that home values are plunging without balancing it with good news, the alarm the public feels is very real. However, mortgage rates are still incredibly low and there is an expectation that they’ll go lower, so not all is lost.

If you’re looking to sell your home in this market, it’s true that it’ll go for less than what it could’ve sold for this time last year. However - and this is important - if you’re looking to sell and buy another home, you’ll make up the difference in the home you buy. Plus, you will likely be paying a much lower interest rate to boot.

Why wouldn’t it be a good time to buy? Cost of living increases (a gallon of milk in Kauai, Hawaii goes for $10, while it’s only $8 p/gallon in Honolulu!!) sure have me wigged out so stepping into a big mortgage may be worrisome. Also, with gas prices rocketing faster than the Discovery space shuttle… we all worry.

However, it is still key to remember that this too shall pass and when it does, the growth in your home equity will be well-worth the leap of faith that our economy is solid enough to bounce back strongly in another year.

Some of the housing markets hardest hit by the foreclosure epidemic are seeing small signs of new life, thanks to eager bargain hunters seeking to capitalize on a golden opportunity. Home buyers in Detroit, Las Vegas, and Chicago are saving 30% to 50% by buying foreclosures, according to USA Today.

The article tells the story of Ruth Ahlbrand, a Las Vegas realtor who capitalized on her city’s tremendous foreclosure rate. Ahlbrand trained her agents in foreclosure deals, transformed her marketing campaign and even purchased a 40-seat bus to escort deal seekers around the city. Not only will bus tour participants see actual foreclosures available on the market, they will have the added bonus of hearing an agent on a loudspeaker lecture them on the ins and outs of buying foreclosures.

“It’s like a seminar on wheels,” Ahlbrand told USA Today. “Buyers are saving up to 30% or 50%. People are really looking for a deal. I’d almost call it a frenzy. We’ve hit the bottom, and Las Vegas is growing.”

Leading the pack in terms of reduced housing costs are Las Vegas and Miami with more than 19% reduction, Phoenix with around 18% reduction, Los Angeles and San Diego with more than 16% reduction and Tampa and Detroit with over 15% reduction. If ever you’ve thought of owning a home, now’s the time. Just don’t be afraid to wait out the seller or even pitch a low-ball offer. Amber Gilmore, one home buyer mentioned in USA Today, played the waiting game and earned a reward of $100,000 off her foreclosure purchase. While many buyers are still tentative about dipping their foot in the real estate waters, content to wait out the deals, it’s good to see that the really hard-hit cities could start seeing a turnaround soon.