How the Economy Has Right Sized Prices to Create Your Wealth

Services for Real Estate Pros with Clever Investor

I know what you’re saying – “Oh good. Just what I need. Another person weighing in on this infinitesimally small uptick in housing prices. I can’t wait to have some sunshine blown up my skirt or trousers AGAIN!” 

Yes, a survey of 113 economists, experts and “investment strategists” (how do you apply for that job?) “show a growing confidence in the long-term prospects of home prices in the real estate market.” (This from a study by Pulsenomics.)  They are predicting a cumulative (NOT year over year) increase of about 15% over the next five years.  That’s about 3% a year.  Well, that’s better than the sharp stick that has been repeatedly poking us in the eyes since 2007 or so; not quite as good as the average 5% year over year growth that most areas experienced before the boom market.

So why is this good news for you (and for me)?

First of all, it tells us that we’ve reached a bottom level. That doesn’t mean prices won’t drop slightly again in various areas when the foreclosures that are being held back start hitting the market. But it does mean that the market has reached a certain amount of stabilization and the freefall has stopped. Prices have returned to pre-boom numbers. That is the typical result of a boom/bust cycle. We are there.  And it is good.

It also shows us that people are buying again. You need buyers to make this real estate world go round and the slight rise in sales that we are seeing are the people who have adjusted to where the market is today.  People held off during the bust because they weren’t sure how low prices would go and how fast they would get there. But the world keeps turning. People change jobs, have kids, send the kids off to school, retire. Needs change. At a certain point, people need to get on with their lives. They can no longer put off buying a new home or selling the old one.  These people are helping to stabilize the market.  And a stabilized market is a good place to invest -- especially when it is basically as low as it will go.  

Think about gold for a moment.  People who bought gold five or more years ago are sitting on a goldmine, pardon the pun.  But now that gold is going through the roof everyone wants some.  That continues to drive gold prices higher.  In five years people will be using this same scenario example when talking about real estate.  Those who bought it today are sitting on a goldmine  and in five years everyone is going to want some.  Real estate, that is.  Do you want to be the guy trying to profit on the tail end or the front end?

Which leads us to…  Home sellers who chased the market down now “get it.”  The house they paid $300,000 for in 2006 is now worth $150,000. Sellers blindly held onto their prices, relying on the “greater fool” theory to bring them a buyer willing to pay the crazy asking price. Reality has finally sunk in. The first step to solving a problem is to realize you have a problem. Sellers have come to terms with the idea that they have a very big problem. If they are going to sell now instead of holding for the next 10 (or more years), they are going to have to man up and take a hit.  At the very least, it is forcing some of the smarter sellers to be more creative in their terms.

Best of all, you have time to make deals. Lots of time. And because there is little appreciation, this market is going to teach you to be a cash flow investor. It’s going to teach you to make your money when you buy, not when you sell. It’s going to teach you how to talk to owners and structure deals that work for both sides.  And this, my friend, is where you learn to be a creative real estate investor, not a speculator who got lucky in the run up.

Is that blowing sunshine? Maybe a little bit of sunshine. However its real sun not "tan in a can" or "boiler bed sunshine".  But the truth is that a smart (dare I say Clever?) investor can make money in any real estate market. This particular market is a huge opportunity because so many people are holding onto what was. Yes, it was great when you could put a contract on a house and flip the contract a week later for $20,000. (And for the record, you still can.) It was great when you held onto a house for two years and made $50,000 or $100,000 or more because prices were going up at 15 – 25% PER YEAR. Everybody and his dumber brother made money in real estate then. And they’re all out of the market now. One of the bonuses for today's investor is that the market washed out the folks who had more money than sense and undercut every offer you made because they falsely believed the key to making money was buying anything that wasn't nailed down.  Which leaves plenty of room for you to get in, build your portfolio and make money while everyone else is crying that the market sucks. It doesn’t suck. It has just changed.  And the next ten years are going to be a huge opportunity for you to pick up quality properties at the right price.  The right price means you can make a profit.  The right price means you can be successful.  The right price is the perfect opportunity to create your wealth.

I know its been scary to invest in real estate with plunging prices, floods of foreclosures, and general market instability.  Folks, the market is stabilizing.  Now is the time to create a real estate portfolio that makes sense - dollars and sense!  Join me for some really awesome free training and together we will get clever about moving forward with our real estate investing.  Click here to get on board.  You might even score an iPad to take your business mobile!

Investing With You,

Cody Sperber


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Cody Sperber SignatureCody is the founder and CEO of Clever Investor, the industry's premier source of quality real estate investing education. Cody has successfully closed many different types of real estate transactions including wholesale deals, short sales, multi-unit, subject to, lease options and his own proprietary investing strategy, the Reverse Short Sale. As a new investor Cody quickly gained a huge competitive advantage by mastering online lead generation, building one of the most successful real estate investing firms in the Arizona market. His companies have bought and sold hundreds of millions in properties and he has enjoyed several years where he's closed hundreds of real estate transactions. Before real estate Cody served time in the Navy and attended Arizona State. He is now married to his best friend and they have two beautiful children (Hudson and Brynlee).  Cody most recently published the Start Closing Deals course on real estate investors.


Comments (4)

Ginger Harper
Coldwell Banker Sea Coast Advantage~ Ginger Harper Real Estate Team - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

It is still hard to know whether we have reached the bottom yet. The high was so very how low do we go. If we have hit the bottom, we need to stabalize and then we can start growing again and confindence in buying and selling will return. and I am ready!

Oct 21, 2012 11:46 PM
Ron Dobrosielski
Keller Williams Realty - Beverly, MA

I agree that the market has hit the bottom and prices are starting to go up.  If the buyers stick around for a while this up trend should keep going.  We just dont know for how long. I'm happy to see:) 

Oct 22, 2012 04:52 AM
Jean French-Turner
Southport Realty, Inc. - Southport, NC

OK- Things seem to be stabilizing with the real estate market for the near future- but there is the great unknown. For every economist that has one opinion there is one with the opposite view-what happens to the 40% who are under-water IF they HAVE to sell?  Young people are going to be saddled with massive debt-what will they be buying?? I am a realist-what goes up must come down and vice versa.

Oct 22, 2012 05:11 AM
Jordon Wheeler
The Jordon Wheeler Group - Fairburn, GA
J W Group Real Estate Sales and Service

Hey Cody,

You are correct that we have pockets of stabilizing prices in real estate, but there are still hard hit areas especially here in metro Atlanta.  Of course with Georgia being sixth in nation for foreclosures, it's no wonder.  But I continue to to expect the best as we pull away from the low of lows.  Thanks!

Oct 22, 2012 02:15 PM