OfflineWe’re not recommending passive real estate investing through stocks, bonds, mutual funds or REITS, Real Estate Investment Trusts. However, active real estate investors can gain some great insight into the markets and even improve their investment decisions if they watch those other markets and the market trends moving them.
In an article this week at CNNMoney.com, various ways for investors to play the improving housing market for profits were outlined for readers. Housing stocks, for several years seeming to be worse investments than a lottery ticket, are now hot commodities. Home prices in October were up 6% from a year earlier, and new home construction reached a four-year high. As a result, housing stocks led the market in 2012.
Stocks in housing related industries have been booming. In 2012:
• homebuilders returned 77%
• the lumber industry returned 74%
• home improvement stores yielded 55%
While the purchase of these stocks is expensive right now, the trend indicates a strong housing recovery in the short term and most likely a long term improvement in all areas of housing. There will probably be slowing factors or developments that will temporarily derail growth. Those could include another major burst of foreclosures or the discussed elimination of the mortgage interest tax deduction. However, those are considered short term influencers, with markets again rising later.
A Moody’s housing economist forecasts above-average growth in construction, prices and home sales through 2014, and states that this growth will continue after that as well. There’s certainly room for more growth, as October’s annualized 894,000 housing starts, though up 42% year over year, were still below the industry’s 50 year average of 1.5 million. Each percentage point of appreciation in housing prices means an additional $190 billion in home equity. This gives homeowners confidence and they spend more to fix up their homes.
However, from the investor’s point of view, this should also mean a return to more existing home sales and “moving up” to larger homes.
Is anyone else concerned about prices in "Hot" markets like AZ, CA, FL, etc being artificially inflated? When the value of a property goes down by 50%(AZ, NV, FL) and the media says prices are back by 10%, 20%, 30%.....but they initially dropped 50%....Is another bubble on the horizon? Even Detroit is heating up. Detroit? Blackstone and the other hedge funds(especially foreign investors) have unlimited funds to buy blocks of properties, cheap and easy. What's a small time investor to do? I want your thoughts. (+ or -).
Nothing Happens Until Something Moves!
I've started to notice bc of all the ppl buying homes in certain market, that some of Deans investing strategies aren't working bc of the value & the rental market on the rise. If you are buying in these area, you have to step up your game & act fast. Or, do you jump in line wit the rest of the fish & swim to the finish line?
Mike
https://tvallc.isrefer.com/go/RehabLite/renvestr/ Free tools
What do you recommend in this type of market?
Hi all, sorry about the brevity of the previous question. I was trying to send it in from the tablet where typing is a little more difficult. What I meant is this: In this market who is the typical buyer for us? What are they looking for? I think knowing that really helps to know how to market our services/houses. Thanks