OfflineI have been reading news in the Sierra Vista Herald for June 6th 2008 and at a recent meeting to discuss economic issues and growth in Benson Arizona (close to where I live) This is part of what was said by Arizona Treasurer Dean Martin, who was a guest speaker at the event,
“To look at the real picture here, you should drive by a Starbucks,” Martin said. “If people are still willing to pay $4 for a cup of coffee, it’s not that bad of a recession. You really need to get worried when the Starbucks is boarded up, or if McDonald’s is boarded up, because that means people can’t even afford the 99 cents for a cup of coffee.”
The state has the highest foreclosure rate in history, and Martin said that goes to the supply-and-demand factor.
“We were the second-fastest growing state in the nation, and they built too many houses,” he said. “With so many, there is no demand.”
Martin said he expects the state housing market to hit its lowest point in November or December of this year, and will not recover fully until 2014.
“The housing market got us into this, and it’s going to be the housing market that has to get us out of it,” he said. “The bigger problem is that our housing market cannot recover until it does at the national level. Right now it’s in the crash phase, and it will not begin to recover until 2010 or 2011.”
Surely this must indicate how one invests in this area to make money????
Can anyone tell me what strategies would be best to work with given this information?
Deb
If the Arizona Treasurer is correct, now would be the time to start accumulating real estate. Should this be the lowest point, and the rental market is strong, buying now and renting for the intermediate period would make a lot of sense. If the rental market is weak, it's probably not time yet, but you could still search for really good deals and if renting won't pay the bills you should be able to sell for a nice gain. Not as nice as letting the market rise more, but better than passing on the deal.
Maybe you could get Mr. Martin to confirm his prediction now. This could be a bottom market (as described by Dean), which would be an encouraging factor in deciding to commit efforts and resources. Tenants could help you hold rental property while values begin to strengthen and increase. How long you might need to hold would depend on how the market recovers. Renting with an option to purchase may increase the monthly income and let you set the purchase price higher in anticipation of a higher market.
cactusbob