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What is Happening with the Real Estate Investing Market

Jun 12, 2008
Well lately it seems that the real estate market is doing a little better than what it was doing before.

The inventory of homes seems to be flattening out instead of increasing. Banks seem to be a little more stubborn on their prices of their foreclosures. Buyers that have been waiting out this down trend seem to not be able to wait any longer. Is this a sign that the market is going to turn around?

Well it's definitely a sign that things are flattening out a bit. Remember bottoms are flat and tops are usually steep. There are some great signs that the real estate market is going to get better. One of the things is that the media is reporting on the real estate market more positively. A lot of what is happening with the slowing down of the market is just a mental thing. People let their emotions dictate the market. Once public confidence comes up, so will the market.

Of course there are some definite factors that determine the trends of the real estate market. For instance homes won't sell if people can't afford them. The ratio between the earnings and the price of homes must be inline.

Another factor is the bank foreclosures. The banks are forced to get homes off their books at times and so it results in huge price decreases. Owners of homes who wish to sell their home must compete with the banks.

This drives the market down especially when the banks price their homes below the equity of the home. Neighbors are forced to short sale, hold on to the property to sell at a later date, or foreclosure. It's a bad thing so it is good that banks are tightening up the price right now.

Another thing to consider is that not every state is doing bad. Some states are still showing signs of appreciation. Also consider the fact that certain price ranges are doing well even in struggling states. Look at Arizona. It seems that starter homes still have a high demand and are often times getting multiple offers.

It's those homes that cost over the FHA and Conventional loan limits that are taking the hit. Look at homes priced near 500,000 and above. Often times the interest rates are above 8%. That sounds unheard of with the 5% and 6% rates we see in the conventional loan limits. So the more expensive homes make the market seem like it is worse than it is.

It's going to take some time for buyers to make the decision to purchase. But once that decision is made it won't be long before the market turns around. As long as there aren't any hiccups in the market things will get back to normal.

When things recover there may be a sudden up burst in the market. Look at all the real estate companies going out of business. When the market turns around there may be a shortage of realtors. Not that it will affect the market, but think about all the home builder companies that have stop building. It takes time to get permits and to buy land to build homes on. There is almost always a shortage after a down market like we have had. Be prepared. chandler real estate
About the Author
Luca Ricciardiello is a property investor and business owner.

Visit Property Investing Site for 50 more quality articles on property investing, flipping, short sales, FSBO, rent back, financing and other property related topics.

Through Property Empowerment Luca empowers women by helping them manage their mindset, their money and create wealth through property investing.
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