The latest data from the real estate industry shows a marketplace in steady decline and no bottom in sight. Residential home sales are in freefall mode with an expected 25% decline in the total number of home sales in 2007 versus 2006. Additionally, homes sales are currently off by more than 35% from the record year of 2005 when over 7.0 million homes sold.
Industry analysts estimate that we're on track to sell only 5 million houses nationwide for the entire 2007 year, which is the slowest pace since 1999. Equally sobering is the fact that at any given time there are about 4.4 million unsold homes for sale. Based on the number of available houses, it would take about 10.5 months to sell all the houses on the market right now.
It's not just the number of homes sold that is falling; it's also the sales price. The median, or average, home sales price is expected to dip below $211,000 for the year, which represents the first time since records have been kept that the year-over-year price of a home fell.
While home sales are plummeting and sales prices are falling, the only thing that seems to be rising is the number of foreclosures. During the first ten months of 2007, the foreclosure rate nationally surged by about 94%, which puts about 573,000 homeowners at risk of losing their homes.
As bad as things are right now, we might just be at the tip of the iceberg, because more than 2.2 million home loans are going to reset in the next year and a half as introductory and teaser rates end. Homeowners are faced with payments that are considerably higher than they had banked on – or budgeted for. Bush’s new homeowner bailout plan will save some, but will excluded most of the homes that are close or already in the foreclosure process.
Aright enough of the doom and gloom. With all financial bubbles there are many losers but a few big winners. Despite all of the above, now is the time to consider real estate investing. With prices down and motivated sellers everywhere real bargains are popping up and the long term returns on real estate should be outstanding in the coming years. Much of the risk has been taken out of real estate investing.
The housing market has undoubtedly changed, but I still think real estate is one of the best long-term investments you can make. I also think if you know what you're doing, there’s a whole lot of money to be made right now by investing in real estate.
The key to this opportunity is the ability to raise cash or credit quickly to make low all cash offers. The ability to have a combination of cash, credit lines and access to private lending will allow you to make low and compelling offers. In many cases, buyer will forced to accept any reasonable offer.
If you do this, you'll discover that this is possibly one of the best times in more than a generation in which to make tens of thousands of dollars -- or more -- by playing your cards right and timing your real estate purchases in a way guaranteed to help you build a fat real estate portfolio.
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