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Has The Real Estate Market Hit Bottom Yet?
When you think about the economy and it's constant up and down status, it's funny how the "experts" seem to come out of the woodwork to talk about a real estate investment. While we're all gasping for air and looking for a way out, they seemingly have the answer. Regardless, the economy will continue to do what it will no matter what they predict and cash homes buyers will be hanging on every word.
Around the first quarter of the year the country saw a steep decline in the retail values of the housing market. In fact, it happened to be 60%, and even though the 2nd and 3rd quarters had minor gains, it was only a slowdown of the overall process. Today, realtors are predicting that there will be a slow steady rise in home values. According to them, it's smooth sailing from here.
So do you think these guys and gals are really in touch with reality? The first thing you have to think about is the supply and demand factor. It's really easy to understand and it all starts with the price being predicated on availability. Around the spring of 2007, potential buyers had begun to hold back. The winter brought about over-flated prices, but tended to level off. Once the 2nd quarter came about buyers weren't worried about all the usual cautionary considerations. Needless to say it was a sobering time for many, and now deflation seems to be the trend if you're looking for a real estate investment.
Now, traditionally families prefer to move during the school summer break. How many are content to transfer their family's residence once school is back in? Not most. Hence, there is greater demand during this time and prices are logically driven upwards.......even if only a little.
When there was a greater demand, banks held up the flow of foreclosures that hit the market. Since a sizeable percentage of the foreclosures were held back, you would think the values across the board would fall. This is exactly what happened, and it was something experienced by the entire market. What it came down to is that the supply was lower, and the demand was higher for cash homes buyers.
What, then, does this spell for the near future? Well, peak season came to an end and September brought a new flood of foreclosures hitting the streets. The tables had turned once again and now supply grew while demand diminished. The massive number of foreclosure files yet to be processed is an indication of a steady supply from desperate sellers. Thus the trend will likely continue in a downward direction at least till next spring.
Keep in mind this isn't just the low tier homes either. You will find a plethora of "A paper" loans in the big pile, mostly due to financially sound reasons. These are individuals who have large household incomes, but couldn't make their payments for one reason or another. However, there are several who could make their payments, but decided to get out from under the huge debt in the current market. Two years from now they can purchase the same home for much less, and be in a better financial position. In the end it just makes sense.
In the end, if you know when to make a real estate investment, and when to be cash homes buyers, you can make all kinds of money in this industry. Sure you can listen to the so called "experts," but you may lose your hat in the process. Just keep the "supply and demand" scenario in mind and you'll be able to be successful.
About the Author Judson Barrera an active Invesdoor Territory Manager and real estate investment expert. Sell your home fast Get an Immediate Response from an Investor. No Waiting, we Buy Houses NationWide.
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