Real Estate Investing Information

by : Brad Wozny



Word has it that the property market will start looking up early next year. This means that individuals who want to sell real estate will not be able to get a good deal, unless they are priced competitively. A little of bit of aggressive marketing will also help. If buyers, who do not have access to conventional sources of finance are given the benefit of special schemes to buy, like leasing or seller-financing, it may help boost the real estate market.

The forecast for home sales is not very bright presently. There may be a fall in prices and this situation will persist till early next year. Admittedly, the US economy is facing mild recession and this is affecting the buying power of people, which, in turn is affecting the real estate market. While the forecast is better than what was predicted a year back, it also means that this mild recession will soon spread to the other parts of the economy, slowing it down. The sub-prime crisis has compounded the problems of lenders.

The increasing foreclosures are adding to the problem of a depressed real estate market. Foreclosures are a double whammy; they deprive owners of their homes and also bring down their credit rating, preventing them from getting loans again. To quote David.F.Seiders, 'Foreclosures keep getting worse. Where does it stop?' It has become a vicious circle. The demand has dropped on account of the mild recession and those who have purchasing power, are postponing their purchase decisions in the hope that the real estate market will fall further.

Construction has slowed down, as the forecasts are not very bright. The housing sector is full of homes that have remained unsold and it would take at least 11 more months to sell these unsold homes. With this kind of forecast, building industry has slowed down. This will definitely bring prices down. The slowing down in the construction industry will have its effect on jobs. Unemployment may see more foreclosures. In places where people are losing jobs, prices are expected to fall by as much as 40%.

However, the views on real estate investing are all not gloomy. Global Insight's Chief Economist Mr. Nariman Behravesh is of the opinion that worst may be behind us. He also attributes the current slowdown in the real estate market to low interest rates for a long period of time and lack of regulation on Wall Street. The problems of sub prime can be sorted out as there is enough capital available now.

Mr.James Morgan who is the Managing Director of J.P. Morgan Chase & Co. is putting the blame for the present real estate problem on the sub-prime crisis. Creditors have over reacted to this problem and only those people with enough cash can buy homes. With finance difficult to obtain, it is no wonder that the real estate market has seen a downslide. It is hoped that this situation will sort itself out when credit becomes easily available like before. This should also bring in stability in prices. Basically, the US economy is sound and things should improve by this time next year.