Take Advantage of the Housing Market

Everywhere you look you see articles on the housing market. With the rise in interest rates and other economic factors housing markets across the U.S. are taking a beating.

In the Twin Cities of Minneapolis and St.Paul the number of homes on the market compared to buyers is currently at a 8 to 1 ratio! That is an all-time high. The ratio was 5 to 1 a year ago and 3 to one two years prior to that. The trend for the U.S. as a whole is similar in the glut of property on the market.

When unseasoned buyers and investors hear those numbers they often do what investors do when the stock market is headed South they sell what they have or they hold on. Just about everyone wanted to jump on the Dot com Bull Market of the late 1990’s people were buying stocks in which they had no Idea what the company did.

The trouble is most people buy when they see the prices are going up or they have already had huge gains. Months before 9/11 the stock markets began a massive descent and many of the dot com companies evaporated as quickly as they appeared. When the markets fell many of the investors sold their stock at massive losses. Others began to accumulate and in the past several months they have made a killing on the rebound of the markets.

The trends we see in the stock market can often be used as a model for the housing and property markets. A few years ago people were buying homes and property with no intent on ever living in them they just wanted to capitalize on appreciation. Still other people were using adjustable rate mortgages ARMs as a way of buying more expensive property than they could normally afford and banking on having more income in the future or selling the property when it appreciated. Unfortunately, a lot of these folks are now in trouble and are needing to dump their properties quickly or else they are going to face foreclosure if they aren’t already facing it. We are very likely to see homes depreciate in the short-term in a large number of areas across the United States.

Once again when a trend like this happens some people will lose and others stand to gain. With the number of foreclosures at an all-time high and the number headed higher there will be a huge number of opportunities opening up for investors.

I recently helped an investor buy a home for over $50,000 under market value and within a month he walked away with $30,000 in his pocket! We were able to price the home below market and even in the poor conditions we are facing we had two offers on the house within a week. A couple of years ago this kind of opportunity would probably not have presented itself.

When everyone else is running scared from a certain type of investment that is generally when you should start buying. People often overreact to the highs and lows of a market and the overreaction to the slow market should provide investors with excellent opportunities.

One other trend that is changing is the poor rental market for owners. I have heard a lot of rental property owners complaining over the past five years that the business is getting tougher and tougher.

It is getting more difficult to attract quality renters and more concessions are being made to get them. With the number of foreclosures going up, and the interest rates increasing more people will be back in the rental market and millions more will not be able to afford to buy a home with the interest rates moving up. Look for rents to begin increasing and with it the values of rental properties should increase as well.

Don’t be afraid of investing with the current issues in the housing market. Take advantage of the opportunities that are opening up because of those issues.

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