OfflineToday's report of the drop in home prices year over year shows over a 3% decline since last September. This would seem alarming to most people, unless you have a proper perspective on economics and reality. Whenever you see an article about foreclosures or drops in home prices, it seems like the sky is falling and the world is going to end.
Let's consider the media's take on foreclosures. They may put up an article about "Foreclosures up 300%!!!" This would seem spectacular, except that historically foreclosures usually run about 1%. So a 300% increase would only take it to about 4 out of 100 homes going into foreclosure. Not a great stat, but definitely not the end of the world.
Now let's consider the new report with a drop in home prices year over year of almost 4%. That is 1% a quarter. So, if we were doing a fix and flip, if it takes one quarter do do the project, we just have to factor in a 1% loss from our ARV in our expense estimation. Certainly not the end of the world. Definitely something to be aware of, but not anything to keep us from investing.
Be aware of trends, news and political and economic dealings and news reports, but don't let the media's hype distract you from your goals!
The media never tells the truth. Who ever controls the media controls the worlds population.