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Time to invest....or keep your money in the nest?

By
Services for Real Estate Pros with Short Sale Arizona, Arizona Short Sale Realtor SA634076000

This article was orginally posted on MSN....please note the copyright and link to the full article at the bottom!

 

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"Late last month, Standard & Poor's reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.

In short, the data suggest that real-estate prices hit a bottom some time during the second quarter and have now begun to rise. There's no way to be certain that this marks the end of the long, painful correction that followed the real-estate bubble, but clearly prices are no longer in free fall.

That means if you've been sitting on the fence, it's time to act.

But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, the prices aren't likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can't imagine a better time to buy than right now.

In addition to bargain prices, buyers should find plenty of homes to choose from. The inventory of unsold homes was 4.09 million units in July, up 7.3% from June, according to the National Association of Realtors. And mortgage rates this week were at a two-month low of close to 5%.

Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the new reality of sharply lower prices. And with stricter standards, lenders aren't going to let buyers borrow more than they can afford, which protects buyers and helps to keep prices down.

The flipping days are over

 Unless you're really prepared to accept the demands (and headaches) of being a landlord, I don't recommend direct ownership of real estate as an investment. The days of buyers lining up to buy and flip Miami Beach and Las Vegas condos are mercifully gone. There are much easier ways to make money in real estate, such as buying into real-estate investment trusts or buying shares in homebuilders and other housing-related businesses, such as Home Depot (HD, news, msgs).

 Historically, the mean rate of return on real estate has been around 3%, according to research from Yale economist Robert Shiller, who co-developed the Case-Shiller index. Shares in REITs and other stocks have often done much better."

 

(Original article can be found at http://articles.moneycentral.msn.com/Investing/RealEstate/its-time-to-invest-in-real-estate.aspx, all copyright remains with the author and their respective publications. )

 

My comments: Although I feel like this author has presented some meaningful stats, I COMPLETELY disagree that buyers should not look to RE as an investment right now. There are many of us that still believe we haven't hit "true" bottom, due to the rising unemployment rate/amount of foreclosures to keep coming on the market.

However, learning to manage your properties and run it like a business, rather than "dealing with headaches of being a landlord", as he puts it, can put you very much in the position to create passive income on cash flow properties.

What do you guys think? Great time to buy or go run and hide until the end of 09???

What do you think in your market?

 


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Posted by Tracy "Royce of Real Estate"

Tracy (G+) is a Distressed Property Expert, Investor, Rehabber, and pre-foreclosure extraordinaire specializing in the Phoenix-metro market. She also is an avid blogger, social media enthusiast, contributor to leading Real Estate Magazines, and coach to aspiring real estate investors. Let's connect on Facebook! 

 

"Proudly serving the Arizona Investor and Foreclosure market with high-end service since 2003"

 

 

 

 

Comments (4)

Pam Dunn
RE/MAX Premier Choice - Crossville, TN
Relocation Specialist

I agree flipping is not the way  to go but be careful suggesting REIT's-for if you look at the big boys-they are suffering also. Home Depot has many troubles for the building busness is down. They can not survicce o the weekend warriors.

Land is still the way  to go for the long run. You must be able to hold it 10 years  of so.

Sep 13, 2009 01:44 PM
Tracy Royce
Short Sale Arizona, Arizona Short Sale Realtor - Phoenix, AZ
Royce of Real Estate - Short Sale Arizona

Hmm interesting Pam. I don't know much about land but I've heard mixed reviews on REIT's as well.

Sep 14, 2009 06:06 AM
Don Eichler
Eichler Properties - Granbury, TX

We still like the buy -sell investment of homes vs land. We do buy land but it needs to be in a short term ownership of not more than two years.  If we could do no better than a three percent return I think I would just go get a job at Home Depot.

Jan 17, 2010 07:52 AM
Tracy Royce
Short Sale Arizona, Arizona Short Sale Realtor - Phoenix, AZ
Royce of Real Estate - Short Sale Arizona

Short term land with more than 3% return? That's interesting! I'm don't specialize in commercial/land, so that's a very niche strategy to me!

Thanks for the comment Don! 

Jan 19, 2010 06:46 AM