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Boom or Bust
For those looking to invest in the real estate market?keep your eyes on the headlines. According to the Federal Deposit Insurance Corp. (FDIC), the number of areas across the U.S. with real estate booms shot to 55, increasing by nearly two-thirds last year. The FDIC warns, "these booms may be followed by busts".
"Boom" areas are defined as having inflation-adjusted prices at the end of 2004 that were up 30% or more in three years.
Of the 362 major metropolitan cities included in this study, over 15% were boom areas. This data, analyzed by the Office of Federal Housing Enterprise Oversight, more than doubles the peak of the 1980's booms and is the highest ratio of boom markets in 30 years.
As for "boom or bust", busts are rare. Only 17% of U.S. housing booms from 1978-1998 ended in busts, which are defined as a 15% or more drop in home prices over a five-year period.
What is making the market soar? Aside from inflation, the mortgage industry has to be considered first. Adjustable rate and interest only mortgages are growing in numbers and subprime loans now account for 10% of all mortgage loans.
With interest rates lower than they've been in years, borrowers can afford to finance an amount greater than the standard 80% loan to value. The percentage of loans exceeding 80% of the purchase price has grown to over 30%. If a borrower has an adjustable rate mortgage and the interest rates rise, their payments increase. If the market values drop, or bust and they have 90% or 95% loan to value, they owe more on the home than it is worth. But these are all "What ifs??".
In the markets with the highest number of "boom" cities, California with 21 cities has a high increase rate of 58% and Florida with 11 cities has a high increase rate of 54%. These two states alone account for 60% of the boom areas! With these numbers, would you purchase an investment property in Florida or California and flip it in three years for a possible return upwards of 50%?
Of course. A relatively sound investment. How much longer can the market withstand these price increases before it busts? Even history shows a period of time when the market stalls so that inflation can catch up. If you want to invest in real estate, carefully examine the history of the market you are purchasing in! If it has been booming like Florida and California, be careful how long you hold on to the property. If you notice the market is starting to drop, sell. Hold on too long, it may bust!
Jason M. Rigler
Working With Your Real Estate Attorney
Purchasing or selling a home will probably be one of your largest and most important financial transactions. Before signing a contract to purchase or sell a home, both buyer and seller should consult an attorney to assure that the real estate transaction will be handled legally and professionally.
San Antonio Texas Real Estate
The San Antonio, Texas real estate market is still going strong even after several years of growth.San Antonio ranks as one of the most affordable cities in the nation to purchase a new home.
Real Estate Investment - Why it is Big Business?
When examining the different asset classes, real estate is generally far less volatile than shares and real estate tends to be the haven that investors flock to when other asset classes are suffering.It is true to say that investment properties can have many benefits in terms of building long-term wealth, but we must never forget that this wealth is not guaranteed!Following the global real estate boom of the late 1980's many investors learnt this hard lesson when they found their properties were worth far less than they had actually paid for them and the bottom seemingly fell out of the over-inflated market.
The Perils of the Property Ladder: Has Anyone Noticed the Silence?
There was a time when every conversation was focussed on property and every other TV programme was about property makeovers. Everybody wanted to get into property and those already on the ladder seemed fixated on becoming wealthy overnight.
Do I Have To Buy Real Estate Through An Agent?
Sometimes when we are very busy professionals and very rich it might be convenient to let an agent do the groundwork for us. Letting them make appointments, drive to the property, roam through house after house sizing them up until they find a few great homes that might be just perfect for us.
Buying A Holiday Home in Rural Ireland
Ireland has recently witnessed an upsurge in the number of investors buying holiday homes in some of the country's most scenic areas. With stars like Jeremy Irons and Daniel Day-Lewis popping up in the quaint villages of West Cork, prices in many of these areas are at a premium.
FSBO Novel Preface
PrefaceWe are For Sale By Owners, "FSBOs." We spend our time trying to sell ourselves and others on what we are doing or what we want to believe.
6 REASONS for Investing in Florida Real Estate Investment Property NOW
I invite you to take the next few minutes to learn the truth about the real estate market, how it compares to other methods of building assets and why it is such a lucrative form of investing. Many potential investors will say, 'I need to get into the Florida Investment Property market', especially taking into account current stock market fluctuations and the HOT market for investment properties, but simply don't know the facts about Orlando property investing and how to use sale and leaseback method of property management.
Types of Listings with Agents
There are several different types of listing contracts. Few of them are detailed below:Open ListingThis type of listing is when you, the seller, don't want to commit to any one particular agent and when you are also open to selling the home by yourself.
Perhaps you'd like to take advantage of today's great buyer's market in housing but feel a little intimidated by everything that's involved.You know the routine: finding the right locale and the right house; negotiating an agreement; putting together a down payment; and selecting the best mortgage available.
Building A Home? Want To Ask A Builder The Right Questions - Not The Dumb Ones!
These are real builder questions that I got from readers of my e-book, "Residential Development Made Easy" with answers from a major USA Master Builder operating in 48 States.Question 1.
Evil Gains Entry
When we open our doors to strangers, we can never be certain what malice an outsider might bring in. Police officers tell us to keep our doors locked with good reason.
Preparing To Make A Zero Down Offer
I'm going to focus on the Seller of a hypothetical property you have found and the offer that you are going to make. You want to write it so it has a reasonable chance of being accepted.
Find the Right Apartment Quickly and Easily Using an Apartment Locator Service
You've probably seen the ads or heard about apartment locators. But what do they really do and why should you choose an apartment locator to help you find an apartment area?One of the biggest reasons to use an apartment locator is the fact that there are hundreds of apartments to choose from.
Closing Costs When Buying A Home
Closing costs are often the last thing a person thinks of when buying a home. While closing is the joyous moment the home becomes yours, the costs can be surprisingly aggravating.
What Should You Do If Your Home Isn't Selling?
It can be very frustrating to put your home on the market, expecting a fast sale, only to find that after six months you're still waiting for an offer. What can you do?First, determine if it's a result of timing.
Escrow From a California Homeowners Perspective
The Escrow ProcessBoth Buyer and Seller deserve the assurance that no funds or property will change hands until all of the instructions in the Purchase Contract have been satisfied. The Realtor submits Buyers and Sellers signed documents and Buyer's deposit money to be held by an independent neutral third party (Escrow).
Timing Clauses Stop Sellers From Inciting Bidding War
It is no secret that the current real estate market is hot, hot, hot. Sellers can receive multiple bids for their property on the same day.
Fraud in Real Estate, Are You Being Victimized? - Part II
The phone range and Peter was on the other end of the line. "Willard, I have a friend of mine that has a real estate problem.
How to Qualify For 90% Plus Commercial Financing!!!
There are three important questions that you must understand and answer correctly in order to achieve 90% plus commercial financing! Where to go to locate it? What type of project will qualify? And last, how to negotiate for it?To start, you must understand the lender's mindset?..
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