I am writing in November 2010 on Thanksgiving Day, so you can imagine what I am going to write. Since the demise of the tax credit, we have seen properties taking longer to sell. Buyers are hearing rumors of a double-dip recession and they are sitting on the sidelines. Both Fannie and Freddie maintain that home values are going to drop another 4-7%. Employment has not peaked as business owners are not overly hiring. Many commercial offices and factories remain vacant and that's a concern. So people who are employed are not so confident they will still be at their jobs and for this reason they are putting buying a home behind them for now.
On the other hand, we have seen an increase in real estate investor activity. It is reported that 60% of all the purchases are made by investor buyers. That is not surprising given that home prices are at a historic low. Most of these investors are cash buyers, but for those who choose to go the financing route, putting 25-30% down, they can also experience HUGE cash flow, which was never heard of before.
In my opinion, what realtors should do is target people with deep pockets (doctors, lawyers, engineers, business owners) and show them the advantages of buying real estate in this market. These investors can then become the buyers of the short sales that are glutting the market and get them off the banks' bad books and into the hands on tenants or first-time home buyers. That's how to improve this economy. It does no one any good if people with money abandon their hard-earned money in the bank and get miserly yields. The current real estate market offers these high-earners the opprtunity to increase their net worth while also helping the US economy to get to the level it needs to be.
Company: Pacific Realty Partners
Phone: 510-299-0093
Email: lejoy at prpbay dot com
