Silver lining to housing outbreak

Prices in most areas are now cheap. They have adjusted a long way since the bubble started to burst five years ago. Some are still sceptical of the real estate markets that have held up best major stuff like San Francisco, Manhattan or Beverly Hills. It’s difficult to have a great deal there. However in the places that have dropped the utmost, there are deals in great quantities.

Zillow found only 4 metro areas in America that have levelled out or increased lately. Remarkably, two of those are in suffering Florida (Fort Myers and Sarasota) have they descended so far they’ve hit bottom.

The second reason: Tons of foreclosures and short sales on the market. Banks are holding back big shadow inventories of homes. Hold all your cards. Keep in mind, the name of the game is not “let’s make a deal.” It’s take it or leave it.

Many places rental yields are great. It’s cheaper to own than to rent. The recent buyers have purchased condominium units for six times gross annual rents and maybe 12 times net rents. Rents are increasing because many former owners are now renters.

The fourth reason is that you can get a very cheap mortgage. Thirty year conforming loans are dropping as low as 4.3%. Toss in the tax break on the interest and you are speaking cheap finance.

Real estate has significantly proven to offer very good long term protection against inflation is the fifth reason. Returns have basically averaged about 1% or 2% above inflation. At a time when everyone has been piling into gold, commodities and TIPS bonds to safeguard themselves against the possibility of inflation, it seems strange that most popular and successful hedge is the so called real estate goes a-begging.

Some say that they have n o idea when real estate is going to hit rock bottom. Some do say it may take several years. Some do suspect it will do so in different markets in different times. Though there are good homes out there going absolutely cheap. If you search down the bargains, you’re disciplined about price, you might get the right financing and eventually hold on for five years or more and probably do pretty well from here.