Headlines scream that foreclosures are up, property values are down, and pundits are talking recession. What’s true? And what does it mean for real estate investors?

By Jacquelyn Lynn

Pick up a newspaper, turn on a news broadcast, or surf the internet for economic news, and you’re likely to come away with the impression that the world as we know it is going to end tomorrow, so what’s the point in doing anything? Let’s just all shop ‘til we drop and eat lots of chocolate.

The flaw in that thinking is twofold: First, the world is probably not going to end tomorrow—it might, of course, but what if it doesn’t? Spending all our money and getting fat is not the best way to prepare for the future. Second, the media love to use negativity and scare tactics to increase ratings, whether or not their frightening twist on the facts is justified.

Continue reading "The Real Truth About Today’s Real Estate Market" »

Posted 09:01 AM | Permalink | Comments (2)

A survey of 1,049 voters revealed that 53.8 percent thought this is a good time to buy a house, according to a recent article on CNBC.com. Click here to read the full story.

Posted 10:28 AM | Permalink | Comments (0)

The February numbers are out and the housing market is showing signs of stability. Sales of existing homes are rising and inventories are falling. Click to read the MarketWatch report.

Posted 03:52 PM | Permalink | Comments (0)

I saw an online news headline that read:

Housing Bust Gets Scarier
Former NBA Star in Foreclosure

Oh, please! That an irresponsible professional athlete managed to make and squander millions of dollars has absolutely nothing to do with the state of the real estate market today.

Don’t buy into the media doom and gloom. Are there a lot of foreclosures out there? Yes, and that means opportunities for foreclosure investors.

For savvy investors, this market is not scary at all – it’s exciting and full of opportunity.

What do you think when you see headlines like the one above?

Posted 01:36 PM | Permalink | Comments (0)

On Dec. 20, 2007 President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007. The goal of the legislation is to help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages.

Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed. The Act creates a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness they receive.

Continue reading "President Bush signs Mortgage Forgiveness Debt Relief Act of 2007" »

Posted 11:39 AM | Permalink | Comments (0)

In many areas, real estate prices are dropping, inventory is up, and the doomsayers are predicting the worst.

But let’s get personal about this: is the right time for you to invest in real estate? Only you can make that decision, but don’t let “the current market” fear mongers scare you away from achieving your financial goals. Any time is the right time to invest in real estate if you know what you’re doing.

The National Association of Realtors® ran an ad in yesterday’s Orlando Sentinel that was interesting. Though it was targeted to individual homebuyers, investors could learn from it as well.

Some of the points in the ad:

• Right now, interest rates are still at historic lows, conventional financing is available, and FHA-insured mortgage applications are on the rise.

• On average, the value of a home nearly doubles every 10 years.

• During the past three decades, home values have increased an average of 6.6 percent per year.

• The average homeowner today has 36 times the wealth of the average renter.

Definitely something to think about.

Jackie

Posted 08:56 AM | Permalink | Comments (0)

A couple of commentaries published recently have pretty much articulated my feelings on the current mortgage debacle, real estate market crash, housing bubble burst – whatever you want to call it.

Orlando Sentinel columnist Beth Kassab said this about the mortgage crisis and resulting foreclosure rate: “In the end, the problem is the result of consumers shrugging off responsibility for themselves. …if you signed the loan, you agreed to the terms.” Click to read the full text of “Housing mess: Many buyers didn’t beware.”

In “Don’t Cry Over Burst Bubble,” syndicated columnist Stephen Chapman writes: “The boom in prices has long been disconnected from the actual utility of a single-family dwelling, and it's satisfying to see reality assert itself for a change.” Later in the same piece, he notes, “Of course, speculators who sunk money into second homes and investment properties, figuring they could flip them in a year or two for a handsome profit, will also get the short end of the stick.”

At Wealth Intelligence Academy, we teach you to understand market appreciation—but not to depend on it for your profits. Sound real estate investing strategies depend on much more than the luck of a good market.

Jackie

Posted 10:05 AM | Permalink | Comments (0)

We are frequently asked, “Where should I invest?” Our answer to that question is that every market has the potential for good real estate investments if you know the market and know what strategies to use, and those strategies are what we teach.

The National Association of Realtors tracks the sales statistics in markets across the country. Click here to see a list of the top ten markets that gained in 2006. To see the ten markets that lost the greatest percentage in value, click here.

Jackie
Wealth Intelligence Academy

Posted 07:25 PM | Permalink | Comments (0)

The so-called housing slump will not drag the economy into a recession and in areas like Florida, job and population along with stable interest rates will boost markets, especially commercial real estate. This is according to Bob Bach, Sr., vice president of research and client services for Grubb & Ellis Co. Click here to read more.

Jackie

Posted 01:05 PM | Permalink | Comments (0)

Once the media latch onto a catchy phrase, it doesn’t take it long to become as irritating as some of the more popular cell phone ring tones. Jonathan Berr writes:

“But even though I have seen the phenomena first hand, I hate the phrase ‘housing bubble.’ Much like Web 2.0, it has evolved this year into a vague buzzword that probably confuses most average investors.”

Click here to read his complete post.

Jackie

Posted 06:39 AM | Permalink | Comments (0)

The media just love to report on how bad things are. It seems that no matter how much good news there is, most news reports focus on the one bit of negative information.

Mike Moran, chief economist for Wall Street’s Daiwa Securities America, Inc., says the constant negative headlines and TV news warnings are “way out of line with reality” and “just pure sensationalism.” In other words, the sky is not falling on the real estate and mortgage sectors.

Read Moran’s other remarks in Kenneth R. Harney’s article for Realty Times, Economists Beginning to Challenge Media’s Negative Drumbeat on Housing.

Jackie

Posted 03:04 PM | Permalink | Comments (0)

Finally! An analyst who understands that the sky is not falling just because real estate appreciation rates are leveling off and, in some areas, prices are declining. In “Hopeful Glimmers in the Housing Slump,” Businessweek’s economic editor, Peter Coy, takes a look at what is happening in the housing market, why some of the news is better than expected, and why the overall forecast isn’t as bad as some predict.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 07:17 PM | Permalink | Comments (0)

A recent article on CNNMoney.com titled “Real estate insiders go bearish in blogs” supports the opinions of the industry experts that the real estate market boom is over and the market is setting itself up for a correction. Although there are varying degrees of opinions about the current market, the common denominator is that none of the bloggers were singing the praises of the current market.

The article goes on to say, “NAR, chief economist, David Lereah, is on record predicting price appreciation will drop to the mid-single digits.” And NAR spokesman, Walter Molony, thinks we’ll see a balanced market this year. He says, “There has been a steady rise in inventory since last fall, but, broadly speaking, it’s still a little tight.”

If you read some of the blogs discussing the current market situation, you’ll find this article to be on target. There are a variety of opinions about the market, but the general consensus is that the market has slowed in virtually every part of the country. One of these posts also quoted David Lerah as saying, “The air is coming out of the balloon. The bubble is not bursting.” What this means is that investors will need to adjust their strategies to a slower market not a market in crisis.

I found it interesting that strategies are even being as reported in a recent MSNBC.com article. This article found that some builders were looking at the current market as “an opportunity to build market share.” Other builders want to “decrease their exposure and wait out this wave of uncertainty in the market right now.”

If you live in a market where the builders are continuing to build inventory while the market remains slow, there will be opportunity ahead.

So what is the pulse in your market? Has your market slowed? Are you ready to take advantage of the opportunities to come? The news articles, blogs, and industry experts keep talking about the change in the market, the slowdown, the bubble, and even the leaking balloon.

This brings us back to the subject of foreclosures since this is the next big opportunity waiting for the educated real estate investor. Of course with any discussion of foreclosures comes a lot of negative reporting and foreclosure myths.

Posted 01:33 PM | Permalink | Comments (0)

As I’ve mentioned in previous posts, some housing markets like Naples, Florida; Medford, Oregon; and Atlantic City, New Jersey are currently overvalued and poised for a correction. Of all the overvalued markets nationwide, California and Florida have had the largest number of local markets with soaring prices resulting in overvalued properties. However, many other states have also experienced large increases and overvaluation.

Even in states where home sales may have been flat or undervalued in 2001, prices have soared. For example, in Wilmington, North Carolina prices have gone from the $120s to over $200,000. Portland, Maine had an average price of $143,500 in 2001, and at the end of 2005, it was $217,000.

There are markets that have remained flat like those found in Ohio. In Texas, some markets are even undervalued. There are also undervalued markets found in the Midwest, including markets in Michigan and Minnesota. However, these undervalued markets are not to the extreme like the overvalued markets.

According to CNNMoney.com, “Naples went from 72 percent to 76 percent overvalued” by the end of 2005. The lowest undervalued market in this article is El Paso, Texas, which is undervalued at 25%. Thus, the markets that are undervalued are undervalued by a slight percentage as compared to the extreme percentages seen in the overvalued markets.

What does all this data tell us? That most of the country has experienced rapidly increasing prices during the past five years. So what can we expect next?

In the overvalued markets, we can expect a real estate slowdown of sales combined with reduced prices. In markets that are flat, the prices may remain steady, but a slowdown in sales will still occur. In the undervalued markets, the prices may level off and even increase slightly in some markets, but the slowdown of sales experienced in the other markets will also occur.

Regardless of the market you are in, get ready to start looking for bargains. The overvalued properties will fall back in line with value-prices and many will reach that bargain price level. The flat and undervalued markets may already be bargain priced and ready for the foreclosure fallout. Increasing foreclosures in all these markets will produce an abundant supply of bargains for the educated investor to find.

Posted 06:44 AM | Permalink | Comments (0)

One of the biggest fallouts from a deflating housing bubble is foreclosure. If you’re in a market where real estate prices have recently increased rapidly and are now starting to fall, the bubble is deflating and there will be foreclosures in your market.

Senior Vice President and Chief Economist for National City Corporation, Richard Dekaser, looks at housing prices in 299 metropolitan areas in his House Prices in America report for the fourth quarter of 2005. In this report, we can see a dramatic change in overvaluation percentage since the fourth quarter of 2001 in the following three markets:
• Naples, Florida (2001 – 2.5%; 2005 – 96.3%)
• Medford, Oregon (2001 – 6.8%; 2005 – 69.7%)
• Atlantic City, New Jersey (2001 – 0.2%; 2005 – 59.6%)

Since real estate moves in cycles, this means that prices fluctuate up and down on a continual basis, even though the real estate market overall continues to rise steadily over time. If you look at individual properties in the above overvalued markets, you can actually see the dramatic increase in prices during this past five-year real estate cycle.

Continue reading "Housing Bubble Fallout: Foreclosure" »

Posted 10:07 AM | Permalink | Comments (0)

Let’s say that you looked at your local market and you’ve determined that your market is indeed in a bubble. “So what?” you ask. What you need to recognize is that this bubble isn’t the source of great concern, the market correction or pullback that follows this euphoric housing bubble is. So if prices where you live have recently increased rapidly and are now starting to fall quickly and the talk among realtors and investors has shifted from a seller’s market to a buyer’s market, the bubble is deflating.

How do you react to the deflating bubble? Experienced real estate investors and industry gurus recognize that the real estate market moves in cycles and prepare for them accordingly. In the March & April 2006 edition of the AARP magazine, economist Richard Dekaser provides a sample list of overvalued and undervalued markets. At the high end of overvalued markets was Naples, Florida at 84%.

When the market pulls back in Naples, Florida, there will be opportunity for some and tragedy for others. Think about it. If the market has increased rapidly and then starts falling quickly, there will be those that bought at the high side of the market and end up with what “Wikipedia” calls negative equity. Some of those will ultimately also end up in foreclosure. Because educated investors know the real estate cycles, they will be ready to start implementing foreclosure strategies as soon as the bubble begins to deflate. Will you be ready?

Posted 08:10 PM | Permalink | Comments (1)

With all the talk recently about a housing bubble, doesn’t it make you think? What is a housing bubble? And, are we in a bubble right now?

The first question is easily answered using Wikipedia, the free internet encyclopedia, that describes a housing bubble as “…a type of economic bubble that occurs periodically in local or global real estate markets.” It goes on to say that the “…rapid speculative increase in the valuations of real property followed by decreases can result in many owners holding negative equity." In other words, the price of housing increases rapidly then falls sharply, leaving behind opportunity for some and tragedy for others.

Are we in this so called bubble? That depends on who you talk to and what you read. For example, Mike Swanson wrote in a recent article in the WallStreet Window Newsletter that “Yes, there is a housing bubble!” In the March 12th edition of the Miami Herald.com, you’ll find an article titled “Real estate market sends mixed message on prices.” And, on March 17th, a RealtyTimes news article headline reads “Boom Not Over: Census Determines Fastest-growing Counties.” I think a large part of the country has experienced record growth in the housing market recently, but whether or not there is a bubble still depends on where you live.

So with all the conflicting reports, how do you know if your specific market is in a bubble? The quickest way to find out is to get to know your local market. Are news reports focused on recent substantial growth in your area? Have prices risen quickly?Are local realtors and investors talking about a seller’s market so strong that buyers are even willing to pay above the listing prices? Are there multiple offers at prices higher than the asking price for the same property? If you answered yes to these questions, then I would say your market is in a bubble.

Posted 08:03 PM | Permalink | Comments (0)