The real estate boom that is.
How do I know?
The stats tell me. Check out these two.
- First time foreclosure starts are at their lowest point since the year 2000. Not 2008 when things crashed, but 2000! Lower than they were during the last boom.
- New home sales are at their highest point in 8 ½ years.
Add the following to the above:
- The stock market continues to climb ever higher.
- The Federal Reserve is keeping interest rates very low.
- Adjustable rate mortgages are making a comeback.
Suddenly it begins to appear a lot like the year 2005.
What is more, I am seeing A LOT more interest in real estate these days. Everyone wants to know how to go about getting started. Anecdotal I know, but still eerily similar to 2005.
Things do not seem to be quite as exuberant as they were a decade ago but let this be a warning to smarter landlords and real estate investors. The market is definitely heating up. There are still deals out there but there are more and more people chasing them thus driving the prices up. DO NOT get caught up in the exuberance. Keep your head in the game and listen to the numbers. Remember not to bet on appreciation and do not think you will always be able to refinance out. Instead always remember that cash flow is king. I’ll say it again, cash flow is king!
Enjoy it while it lasts. I do not think we are near a crash, but we should definitely remember that nothing goes up forever. So, If you need or want to sell a property, now is the time. In fact, I seriously considered putting some of mine on the market but decided against it. I like the cash flow.
What’s going on in your market? Seeing a boom there? Let me know with your comments.
Hello,
My significant other is in Memphis right now putting new windows in a rental property. I would love for him to find another rental property while he is there! Do you know of any
Maryann,
There are plenty of opportunities out there. I would suggest he attend the Memphis Investors Group or one of their subgroups to network and meet some folks. MIG is having a networking lunch tomorrow (Friday) at noon at the Butcher Shop at Walnut grove and Germantown Parkway. It is free and open to anyone. Perhaps he can stop by, have lunch and find a deal.
Good luck and thanks for reading,
Kevin
Kevin–
I agree that things don’t seem to be as overheated as they were in ’05, but based on your observations (which agree with what I’m seeing in every market I’m looking at) I’d say we ARE headed for a downturn, and soon, like within the next 6 months-1 year. I also expect, though, that here in flyover country, it’ll be one of the minor ones like we had around ’01; a slowdown in the market, a few percentage point drop in prices, lasting no more than 18-20 months. And, frankly, I’m looking forward to it. Hard to compete with people who are willing to overpay for houses!
Vena,
Thanks for reading and for taking the time to comment.
I appreciate your observations but I think we are still on the upswing. The money is flowing pretty well. When the FED turns off the pump and the money supply numbers begin to drop, then we will see a downturn. But then again you may be right as these things are awfully hard to predict.
Either way I agree that it will be nice to get some of that competition out of the way.
Thanks again for reading,
Kevin