Sunday, May 11, 2008

How to Benefit from the Housing Bust

You can't help but feel reluctant to get into housing right now with all the bad press, but what we can't forget is that the housing market is cyclical. For every bust there is a boom, the key is timing. My only goal here is to provide information and point out opportunities that do exist.

I am almost as sick of hearing the word "Foreclosure" as I was of hearing the phrase "Housing Bubble". I'm not down playing the severity of the issue that thousands of families are facing, but I'm not sure we are getting the full story.

I do not argue the fact that Bank owned properties are the majority of what's selling in today's market. This is a link to a recent story on the Sacramento Housing market and bank owned real estate. What I do argue with is the doom and gloom that we can't escape from. All you have to do is look back 3 years ago when the press and the majority of the media forced down our throats that real estate was a "can't miss" proposition. In my opinion, in both cases, the truth lies somewhere in between.

I've been watching this whole mess waiting for 1 thing and that is a trend change. The press is so far behind the reality of what is going on that there is never an in between. All they care about is excitement and fear so that is what they cover. The reality is that these things don't happen overnight. I believe that the real bubble burst as soon as new listings began to out pace the sales for a particular area and inventory began to rise. That was the first trend change back in 2005. There are a couple of great sources for information like this. Although the site OCRENTER is biased, it does provide useful information on Inventories. You can see the Inventories rising through 06 and 07 with an occasional seasonal drop, but then in early 08 you start to see a decline. This is the second trend change and where I believe we start to see the true signs of an opportunity.

There are so many great sources for information like this. Here is a link to some more useful info on pending sales in Sacramento. That is another sign of a trend change. We are starting to see a jump in the pending sales. Of course real estate is regional, so some areas are going to be stronger that others, but you will see for Sacramento County there was a huge jump in PENDINGS for February.

So what does this mean. In my mind it means that the time is now, or in the very near future if you are thinking about real estate. There are so many opportunities out there from foreclosures to new homes. With rates low and sellers hungry the opportunity is there. If you are looking for places to start your search here are a few options. If you are looking at new homes, I would focus on a builders Standing Inventory or Quick Move In Homes. They are hungry to sell so the opportunity to get a home at a low price, with a warranty and with great financing is there. If you are willing to roll the dice on a foreclosure, there are many websites you can search with, but and Zip Reality are always dependable. If you are shopping bank owned stuff, I would reccomend working with a realtor. Many of these properties are coming on the market so low that they are quick to go into pending status. A realtor will get daily updates on new listings which could help you be first to the punch.

In my next post I will focus on the financing side. Thanks for reading!
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