As this market continues to shift, you will begin to hear all of the predictions so the Guru's can say, "I told you so" and make millions on their next book deal. Real Estate is the best bet for long term investment strategies and this has been proven time and again.
Some will be correct with stating, the market is going to crash, while others will continue to say it is always a great time to buy. This is all to dependent upon your entry and exit strategy. Most important aspect of any investment, you must have an exit strategy.
What you will continue to see in my opinion, is over the next 3-5 years, more and more banks will be consolidated or driven out of business. There are very few loan programs available for investors so this will eliminate about 25% of our residential buying market on a national level.
In years past, while conducting investment club tours around the country, I made it very clear to my investors that we had to remain within the low to average income purchase level in all areas. It was really important we didn't violate this threshold due to resale affordability. Californians would go to Texas and see $85k to $105k new construction homes on the market, and say i'll take ten of those. Or just absolutely fall in love with the $300k inventory. In these areas, you have just knocked out 75% of your buyers.
As it becomes more difficult for less than perfect credit borrowers to purchase, the inventory will continue to rise in some areas. I will caution you, there are deals and bargains in any market and neighborhoods, you must study a 6-8 month past trend. With any purchase, you must project a hold period of no less than 12 months.
When the market was on fire so to speak, we were still seeing people walk away from properties. It is now time for us to watch History repeat itself.
Happy Investing.
Louis McGraw CRS
Thursday, January 17, 2008
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