Sure, the news is all negative when it comes to the home mortgage market. But, I just returned from Las Vegas, one of the hardest hit real estate markets in America over the last 24 months.
And guess what; builders are still building condos, houses and other residential housing projects even in Las Vegas! The Fed seems intent on leaving the prime rate alone for a while so mortgage rates are destined to go up as money is tight in the lending markets and will probably get even tighter. Inflation is rearing its ugly head as oil prices remain at all-time historic highs.
America hasn’t had a real estate decline since 1993-1995 and now is probably the best time you could buy a new or resale home. As with any market, timing the very bottom of the decline will be tough, so if you have the cash flow and a good credit report, now may be your best opportunity to shop for a home.
As we have said before on this blog, real estate may be the best investment opportunity ever conceived  and now is an especially great time to finance a new or resale home.
Even if mortgage rates come back down over the next couple of years, you can always refinance. Most people make the mistake of listening to the press during down markets, but contrarians who have the foresight to buy when prices are low always come out on top!
If you already own a home, now is a great time to invest in a rental property or vacation home. Borrow against the equity in your primary residence and leverage your capital to invest now while the market is down. While some would say this is a foolish strategy, the people who have made money in real estate for many decades know that buying in a down market is always the best long term financial decision.
But patience is a virtue and now may be a bit early, so get your ducks in a row and watch the home mortgage and real estate markets very closely over the next 12 months or so; if you’re ready to buy when we begin to see signs that the downturn is nearing its end will be the best time possible to strike!
Many investors who bought real estate in 2006 are hurting now ; if you’re one its best to just wait out the market. Selling your property now will be a huge mistake in retrospect; you should not consider selling your home or investment property at the moment unless you have absolutely no other option.
Remember that all markets are cyclical; real estate is just slower to change directions that stocks and commodity markets, but the swings in real estate tend to be more dramatic and psychology may play a larger role in the real estate market than most others. Also, it’s important to remember that no other investment opportunity in modern times allows you to leverage your capital as fully as real estate. You can still find lenders willing to lend you up to 90% of the purchase price on a qualified property. Where else can you buy a $100,000 investment with only $10,000 of your own money?
Some people will comment on this post saying I’m crazy or stupid, but the ones who already know are those like me who bought real estate in 1995. I bought my first home then in California for only $219,000; a 4 bedroom, 2 bath single family home. People told me I was crazy to buy during such a bad downturn in the real estate market. But by 2000 that property sold for $420,000, bringing me a windfall profit of $200,000 on my initial investment of $16,000 after just 5 years!
If you don’t already own real estate, get ready to dive in to your first property within the next 12 months; 2009 should be the best buying opportunity real estate investors will see in the next 10 years! If you already own property, get ready to leverage it and buy more if you want to accumulate true wealth over the next 10 years. Good luck and happy house hunting!