This is a great article from Forbes Magazine. There are some unbelievable bargains in the Phoenix metro area right now. I have several wholesale properties available; visit the featured properties on my website.
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Buy Real Estate Now
Stephane Fitch, 11.05.08, 06:00 AM EST
Forbes gathered four real estate experts to examine the broken, but perhaps bottoming sector.
11.27.08 - First, the bad news. New home sales in the U.S. haven't been this low since 1991, according to the Commerce Department. Now the good news. New home sales in the U.S. haven't been this low since 1991.
This means prices are back to where they had been in 2004, which is where they had been when this market really started to roar. Even better news for the real-estate minded is that some experts see that even if we're not near a bottom of the housing market, we are on the right track. Jeremy Grantham, the chairman of GMO, and a well-respected market prognosticator, said back in October that the U.S. market is at least halfway to a full correction. Also, even now, some markets are holding up reasonably well. According to the S&P/Case-Shiller Home Price Index over the past year the Dallas housing market has seen its values fall 2.7%, still a loss, but much better than the equities markets. Charlotte is down 3.5% in that time. Even the worst market, Phoenix is down 32% according to the index. Yes, quite bad, but the S&P 500 is down 38% over the past year.
Also, it looks like Uncle Sam is here to rescue the real estate market. The federal government plans to buy up $600 billion in debt either issued or backstopped by Fannie Mae and Freddie Mac. This action pushed down rates nationally last week, as much as half a percent, on good old 30-year mortgages. So real estate money just got cheaper.
Real Estate Investment Trusts are also being talked up once again. In the paper "Securities for Uncertain Times" Raymond James' Director of Real Estate Research, Paul Puryear, says the sentiment against REITs has swung too far negative and recommends several to investors, including the Kimco Realty Corporation, Mid-America Apartments and National Retail Properties. All sport attractive yields, and are considered "safety first" investments by Puryear.
Forbes has done its own research in order to make sense of the real estate markets, assembling a team of experts to analyze the lay of the land. A lively e-mail exchange followed, with picks in residential real estate and stocks. The panel included Spencer Rascoff of Zillow.com, Michael Feder of Radar Logic, Donald Trump Jr. of the Trump Organization and Peter Slatin of Real Capital Markets. The moderator, Stephane Fitch, covers real estate for Forbes magazine.
On Halloween, Radar Logic published a new compendium of housing for the year ending in August.
The results were frightening: House prices have held up in just a precious few cities (Milwaukee, up 3%; Columbus, flat; Charlotte, down 3%). All the big California cities tanked, falling 23% to 28%. Prices in Phoenix and Vegas dropped 29% and 30%. Even prices in resilient New York City are off 7%.
These kinds of price declines in housing are unprecedented. Our friends at Zillow.com reported on Oct. 29 that half of American homeowners believe their residences are worth just as much or even more than they were worth a year ago.
Forbes has assembled a panel of real estate experts to discuss the current markets. A lively e-mail exchange was the result, with picks in both residential real estate and stocks. Joining us were Spencer Rascoff of Zillow.com, Michael Feder of Radar Logic, Donald Trump Jr. of the Trump Organization and Peter Slatin of Real Capital Analytics. The moderator, Stephane Fitch, covers real estate for Forbes magazine.
In Pictures: What To Buy And Where
Spencer Rascoff, Zillow.com: I do think this is a great time to be buying residential real estate, with two caveats. First, you need financing, which is much more difficult than in the past. Second, you need to be smart about it. The good old days when anyone could make millions flipping homes in their spare time are over.
I have four friends who have raised investment funds in the last few months to buy up residential real estate--one in Miami, one in San Diego, one in New York/New Jersey and one in Seattle. It's a great time to be doing this, if you're sharp and well capitalized.