Aug
28

Get Ready… The Real Estate Markets Are Going Down!

Filed Under Real Estate Investing, foreclosure 

The worst is not over and if you think the real estate markets are in bad shape now it’s going to get a lot worse! Bad news for some and good news for investors that understand how to capitalize on the ever changing real estate markets.

Foreclosure rates are continuing at record levels and there is no end in site. Investors and homeowners of financial means have been hanging on and clinging to the hope and dream that things will soon turn around and get better. Many have been hanging on because they are financially sound, they are too proud to lose a home to foreclosure, or they were dreaming that somehow things would work out. They are waking up to reality in a cold sweat!

The homeowners and investors that have been hanging on and bleeding to death financially by supporting upside down houses are quickly coming to the conclusion that it is financially more prudent to lose a house to foreclosure because there is no point in riding the titanic to the bottom of the sea. If you have negative equity of 50K, 100K, or 250K it does not make sense to make payments on the loan when it would take years and years to recapture the losses by hanging on and hoping the prices return. Foreclosure has become a financial decision that now makes sense.

Walking away from an upside down house may ruin your credit now but many are discovering it is worth it to be rid of the negative equity that would lock them into losses for years! Because of this realization people are walking away from portfolios of houses that will be lost to foreclosure. The good news for investors is we can buy foreclosures and REOs for pennies on the dollar.

The next major setback for the market is effective October 1st the Housing Act prohibits seller-assisted financing (presumably this includes the Nehemiah program) and this will lock millions of would be homeowners out of the market and add steam to the housing melt down. How many buyers do you know that have 10% available for a down payment?

The good news? Seller financing will return in force. Banks will be forced to accept lower offers on short sales and REO’s as a matter of necessity and many will carry their own financing. Investors will dominate because they have the means, skills, and ability to buy properties.

In fact, it is already happening and there are greater opportunities now in this emerging market that investors can exploit. In many areas it is now possible to buy newer houses at price levels not seen since the 1990’s. Lenders are negotiating as low as 30% of the defaulted debt amounts. Houses are selling for amounts that provide great cash flow for rental properties.

The best part about the so called housing crash is that it has all been manufactured and is not a real reflection of the market. Bold words… maybe. But if you look at the situation intelligently you can see that there is no shortage of people who want to buy houses. What has created the ‘housing crash’ is the money supply has been turned off which prevents buyers from getting loans and buying houses.

It’s just like a water faucet and the availability of money has been turned off and a draught has ensued. And like a water faucet the availability of money can be turned on at any time and when that happens there will be a rush of buyers to take advantage of the lower prices and the rebound will be in full swing. Imagine the popularity of a new President that ‘turned on’ the money supply and rescued the housing markets. It could happen that fast.

With the changing times there will be a changing of wealth as there has always been throughout history.  While most become victims of choice a few will become wealthy by taking action and seizing  the opportunity.

Author: Gerald Romine

Comments

Leave a Reply

You must be logged in to post a comment.