By all accounts now, not only is the market currently flooded with a number of properties that will keep values in the doldrums for the foreseeable future, but that number will absolutely continue to grow; while many dispute the likelihood of the broad economy entering a second recessionary dip, that eventuality is all but certain within the real estate market itself. Prices are expected to drop another 5 percent over the next year and a half, and even if they stayed flat, they certainly wouldn’t be going up.
According to the National Association of Realtors (NAR), only 4 percent of real estate transactions this summer are for homes with title seasoning (i.e., owned) of less than a year. In other words, the process of short-cycled buying and subsequent selling is now so rare that it’s practically statistically insignificant. In our opinion, anyone seeking to enter a real estate transaction on that basis would have to be, well, out of his mind.
So where does this leave the prospective real estate investor? In a good position, or in a bad one? Well, it depends. For the RE investor with a pile of cash on hand to make the lender happy (or preclude the need for a lender outright), as well as to put into the property in an effort to add value, along with a willingness to deal with people (renters) in the way we need not when trading stocks, it is a fine time to consider the portfolio addition. For those on behalf of whom that profile does not fit? Stay away.
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Bob Yetman, Editor-at-Large at Christian Money.com (www.christianmoney.com), is an author of a variety of materials on personal finance and investing, as well as on topics of fitness and self defense, to include the recently-released book Investor's Passport to Hedge Fund Profits (John Wiley & Sons, Inc; www.investorspassport.com) and the new unarmed combat training DVD Thunderstrikes - How to Develop One Shot, One Kill Striking Power (Paladin Press; www.mikereevesonline.com).