Since January of this year, the number of homes purchased by cash buyers and investors has fallen by 26 percent, despite record affordability that you might expect to draw new real estate investment buyers into the market. According to a report by Capital Economics, this “dampened activity” is directly attributable to an uncertain investment climate, and the lack in activity is unlikely to be made up by first-time and repeat homebuyers thanks to “widespread negative equity and high unemployment”[1]. Since January these parties’ buying volume has increased by only two percent.
Furthermore, the data firm predicts that mortgage rates will “soon fall below four percent” while housing prices, which would otherwise be stabilizing, have “yet to respond fully to the recent weakening in consumer and investor demand.” The group has already predicted that the nation’s treasury bills will probably yield only 1.5 percent by the end of 2011 and remain there “through 2013” thanks to uncertainty about inflation[2].
As is usually the case when uncertainty plays a major role in investing scenarios, it is starting to look like investors are pulling away from the real estate market. What do you think can be done about this? Can the market recover without them?
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[1] http://www.dsnews.com/articles/cash-buyers-and-investors-take-fright-capital-economics-2011-09-15
[2] http://www.investmentweek.co.uk/investment-week/news/2109162/capital-economics-bills-yield-2013
So should we sit on the sidelines and watch?
AS long as the conservatives, including obama, continue to ignore stimulate related investment in our future, you gotta spend money to make money in critical times, then we will continue the downward spiral.
What is real value based on a current supply and demand. Foreclosures at distessed prices , fixed up and rented high rates of return based on equity and debt still leaves the buyer with lipstick on a pig, it’s still a pig. Location and school systems seem to be the only safe approach for single family long term.
The big market is in multifamily for the next ten to twenty years because the government and all else sold home ownership as a right for everyone to have but could not afford.
This one is real simple; Have the goverment/IRS, drop dealer status for anyone buying, and selling/owner financing more than 5 properties. This would allow the seller to pay taxes on instalment, instaed of being tax on unrealized capital gains. And, you don’t have to count on the banks and FHA to fund the deal.
When you have ridiculously excessive addendums to Freddie, Fannie and FHA short sales and REO properties, PLUS Realtors who are so gun shy of representing short sellers because of the threat of a lawsuit from the seller, the buyer, OR the FHFA, small wonder no one wants to get involved in ANY real estate transactions today!!! Then, the buyers who WANT to buy, can’t because their credit has been destroyed by previous shorts or foreclosures, EVEN THOUGH the banks couldn’t have gotten more money in today’s market, anyway. Yep…real estate: where every deal is becoming and OR-deal!
The Government does not want to fix it. Everything is going according to the sick plan of the Globalist Banksters who are actually the one’s in charge. We need to wake up to the real facts before it is too late. Get the truth at web site PrisonPlanet.TV You will not believe what you find out but it is all true. Subscribe and watch the video interviews and the movies there. It will wake you up and the world will come into a much clearer focus. Some of the movies can be seen on Youtube. Such as The Obama Deception, The Collectivist Conspiracy. They are all related to the mess real estate is in because real estate ownership has always been the road to wealth, liberty, independence. All the things that the Globalist agenda wants to destroy. If just one person reads this and does go to see the truth it was worth posting this.
I have felt the same way about the uncertainty in the market. I am not going to purchase a property and lose value 6 months later. If you have a buy/hold strategy, you still have concerns. There is too much bad debt to absorb and the banks are sitting on the side lines waiting to see if the government will buy their bad debt. Do I smell another Resolution Trust Corporation (RTC)?
What about trust deed investing? Never hear mentiion on this site. Yields are reasonable… higher by far than Treasuries. Much easier than being a landlord.
Jeri: right on. As a Realtor, I won’t touch rehab loans with a ten foot pole. I co-broke short sales with my partner. I do the grunt work and all the driving, he handles the 400 page contracts and addendea: it saves my blood pressure. Lori: Okay, I’ve gone to the site for the second time. Read up, watched the vids. I’m sure I’m not alone. Now what? Careful before you all “revolt”. The Patriot Act ignores our 1st, 4th & 6th Amendment Rights. -yes it does.
I’m wondering what line of business these real estate investors are moving into?
In the words of Warren E. Buffett, “Be fearful when others are greedy, and be greedy when others are fearful.” Get educated and stay informed. Focus on getting on base instead of the homerun. Go after deals that have a positive cash flow.