by Jeanette Joy Fisher
If you read many of the real estate investment blogs
and forums today, you'll find that a sizable number of people are really
concerned about whether it's still possible to make significant amounts of
money investing in real estate. It seems as if a fair number of folks have been
frightened by headlines they read in the media about a burst in the real estate
bubble, a downturn in prices, and the number of homes on the market. Is any of
that doom-and-gloom talk true? Let’s examine some of the headlines to find out.
Home
Prices Down
First we'll look at the bursting of the real estate
bubble. Home prices in some parts of the country have declined somewhat over
the past year, but there are a number of areas that have still seen increases
in real estate prices during that time. What the media is really telling people
(although not very effectively) is that price increases have slowed down.
Having real estate prices increase at a slower pace is very different from having
the actual price of homes begin to slip into negative territory.
Home
Construction Stops
Another headline we often see is that new home
construction has ground to a halt, but that's not true, either. According to
recent figures from the National Association of Home Builders (NAHB), building
permits nationwide are only down six percent from 2005. Admittedly, that is a
decrease, but hardly enough to imply that new housing construction has stopped
altogether, especially when you stop to consider that 2005 was a
record-breaking year for new home building! A drop of six percent from an
all-time high is far different from saying that new construction has
disappeared.
Mortgage
Rates Climb
A third headline you've probably read is that home
mortgage rates have begun to take off again. There have been some increases,
but they'd been at very low rates for a number of years, and the increases have
been slight. The average mortgage interest rate is still a considerable bargain
when compared to even a decade ago, and rates have actually decreased slightly
over the past six weeks. Even the federal government doesn't buy into the idea
that rates are increasing. In fact, the U.S. Department of Housing and Urban
Development (HUD) recently decided not to increase mortgage insurance premiums
that multifamily developers pay for several key Federal Housing Authority (FHA)
programs that support new construction or renovation of affordable multifamily
rental properties.
Homes
Sit on the Market
One of the scariest things that inexperienced
investors have been hearing is that homes are taking longer to sell and are
selling at lower prices. Again, that's not necessarily the case. In our own
area, my husband and I listed one of the homes we had remodeled and sold it in
ONE day, and for full price! Although we did pay some of the buyer’s closing
costs, that possibility had been factored into the price when we listed the
home.
The bottom line? Don't let the media tell you what
to do in your area. If you do your homework and become an expert on the real
estate market in your own target area, you'll know what a home should sell for
once you're done the repairs and remodeling. You'll also know how much of the
nationwide trends being reported on in the media apply to your neighborhood.
There's no such thing as a one-size-fits-all real estate trend. All that
matters is if you can make a profit on buying and selling homes in YOUR area.
Free ebook on The Truth about Making Money Flipping Houses
Copyright © 2006 Jeanette J. Fisher
Lake Elsinore Real Estate