OfflineOver at DoctorHousingBubble.com, an article this week speaks negatively about the influence of investors, particularly the big players buying up foreclosures. The old Greenspan comment related to “irrational exuberance” is resurfacing related to real estate investing. The article states that Wall Street and the big banks and institutions are inflating this new asset class and creating a new boom and bust cycle.
Equity studies and charts are said to be highly distorted due to the 100% equity all cash purchases of investors. Comparing the equity in owned homes now to historical numbers distorts the conclusions, as so many homes have been sold since the bust for cash. The clear opinion of the article is that the primary vehicle for building the wealth of the average American is no longer going to be the home purchase American Dream.
More negativity in the article states that the reported benefits to the American family of the real estate recovery is simply not supported by the data. The many graphs showing an increase in equity overall distorts the reality of the situation, as so much of this equity is held by bankers, Wall Street and institutional investors. Rampant investment buying is contributing to higher rents, not a benefit to the masses who need to rent. Investors are still crowding out retail buyers in many areas as well.
While all cash deals are averaging around 39% of the entire market right now, that’s on a national average. In states like Arizona, it’s more like 60% for cash purchases as a percentage of all purchases. In hot recovery markets like California, competition is fierce, with buyers fighting over properties at prices more like the heyday in 2005 to 2006. From the article: “Rising home prices have come for all the wrong reasons: speculation, high level of investors, and artificially low interest rates. The market went into full panic mode just because rates went from 3.5 percent to 4.5 percent!”
More negativity in the article states that the reported benefits to the American family of the real estate recovery is simply not supported by the data.
http://www.doctorhousingbubble.com/california-rental-world-california-re...
I can think of a whole bunch of things that can be discussed under this heading, and probably people will begin to bring them up. I believe it is valuable to examine some of the circumstances that are current in our market conditions, and certainly there are some very interesting things that are happening right now--domestic and foreign, big and small investors grabbing for signs of life in a marketplace that has been stagnant or declining for the past several years--rising prices making it difficult for more and more people to afford homes.
I'm not going to ignore the negative factors in our current marketplace, but those who have been long-term investors, and I mean those who have watched cycles in the market for decades, look at this news and see parallels from the past as prices rise and fall, interest rates rise and fall, and the economy rises and falls. People and institutions react to this, some see opportunity, some see negativity.
Those who are complaining about life and appreciation in the marketplace may very well be the same people who were complaining about the declines of the last 7 years. I choose to focus on the opportunity and the fact that I can help both buyers and sellers with my real estate investing and be rewarded for doing so.
My first mentor in real estate investing was asked when is the best time to invest in real estate. His answer was simple: "Good times, bad times and in-between times." As a homeowner and an investor and a trainer in real estate investing, I would tell you that NOW is the best time for you to be active in real estate investing, and then keep doing it, shifting your techniques and strategies as the market changes. And keep a service mentality about what you do, if you are taking advantage of people with your investing, then please get out of the business, if you are helping people, then keep doing it.
Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall
thank you for sharing!
Dallin, great insight; I totally agree with you; we need to adjust to different markets and keep abreast with the cycle changes; DG talks about it in his book Be a Real Estate Millionaire... it is a great time to invest in RE!
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
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