Is today's market so unique?

I think you said it all right there with that one big word..."CONFIDENCE." If everyone could build their confidence level and just go for it like you did Dean...what a difference we could all make in our lifes. I believe like Joel Osteen believes "that God has programed us all for greatness and wants us to succeed in life." There is no better time than right now to really succeed big in real estate. It is a huge buyers market right now.
Thank you Dean for sharing that with us.
Sissy

I can see where your friend is coming form on this being such a great time and the curve in the market. But I live in Southern California and I am just a little bit older than his 24 years and I have seen this downturn before, but yes it rebounded...but it took time. It will do it again, but there is something a little different about this time, I cant exactly put my finger on it but it is.

I am so grateful you have provided a road map and I am also grateful that I was able to absorb the knowledge so quickly. This market is unique, but they all are in their own ways. This one in particular, like none before it, is an opportunity for so many to stop punching a clock and wrk for themselves and build the kind of wealth that will sustain their family for years to come - but only if the take that step and TAKE ACTION>

Thank you,

Anita, I believe that the "something different this time" may be that in the past, downturns were mainly caused by regional supply and demand factors or interest rate fluctuations. This time, interest rates are still relatively low, but the downturn was mostly caused by people over-extending themselves, and this is on a national scale. Congress has to share the blame for forcing lenders to abandon conservative lending practices in order to avoid big fines for not lending to unqualified borrowers, but they won't.

If our national economy (and the dollar) doesn't collapse due to our massive overspending (mostly by Congress) and the resulting national debt, I imagine that the market will at least stabilize and then begin to rise again. But some very intelligent people have predicted a collapse, so who really knows?

cactusbob

Dean, Great post. I have just started my coaching on line and still listen to Think a liite different also suring the week. For some strange reason, I always go back and listen to your motivational audios. I don't know why, but it gives me a sense security. I am looking at deals right now but I feel to insecure to make a move on them. upstate New York is prime right now and I want to be part of it. I am even going to my first RE investors group meeting in 2 weeks. All I can say is Thank You Very Much for creating this movement that we have going.....Jan

You are right that something is different, as there are lots and lots of factors that are contributing right now to this market. But here is something I told another site member (these opinions are just from my own point of view)...

Short of the entire US economy collapsing and the country going into chaos, which isn't a likely situation, real estate should always be a safe and profitable if you are getting in the right deals at the right times. Those buying at market price, of course they are not always going to be able to feel very safe. But if you are buying a property at 25%, 35%, 50% below CURRENT market value, it is hard to envision a situation where you could be upside down. If that situation were to happen, we all would have a bigger problem on our hands than our mortgages on the books with the bank.

Interest rates are super low, the dollar is super low... real estate prices are super low. This means you are buying more for less... not just less dollars, but with cheaper dollars, and for cheaper rates. When you sell that house in a year or two, assuming the dollar has recovered a little or lot, which is realistic, as there is no way the Fed can continue to cannibalize the dollar for much longer; you're going to have a house creating a profit not just in dollar amount, but dollar strength.

Regardless of how long the economy stays tightened, there is not much more room left to bottom, otherwise, again there is bigger problems than what your credit rating is...
With that in mind, within 2 years from now:
I believe the dollar will be stronger than today.
I believe the housing market will be stronger than today.
I believe interest rates will be much higher than today.

If you can say those things also, it is hard to argue that it is not a good time to invest. Once the smart money starts mopping up the supply, we're going to see some interesting things happen.

Think also about the supply/demand side. Material costs are skyrocketing across the board. Not only is there not a demand for new builds right now, but future new builds will be much much more expensive in material cost. With new builds virtually coming to a halt, looking at areas with strong population growth shows some good potential.

Of course all of this is merely my opinion, but I do spend quite a bit time analyzing the technical and fundamental underpinnings of the a lot of markets. Keep an eye on your regional/city target(s) foreclosure and preforclosure numbers. In my area, the numbers are starting to indicate that a bottom is on the horizon. A couple more months of data will show for sure if that is really forming or just a out of range fluke. I'm not a person who tries to call bottoms, or catch falling knifes. But keep in mind, the world's most successful investor has never been concerned with which way the market was moving. He only cared if he buy a company for 50 cents on the dollar of it's intrinsic value.

That man's name is Warren Buffet. He is still buying like a madman right now on the stock market even as it becomes a bear market; instead of keeping his money on the sideline, which would seem like the smart play to most.

Notice any correlations here... the masses are usually on the wrong side of the market, hence the term smart money (the big money that's on the right side of the market - that's why they have big money). It happened when the masses all started buying real estate like it couldn't ever go down go. The masses will probably be wrong when they are all selling low and staying out, while the minority quietly snatches up all the property for pennies on the dollar in lieu of the next RE boom.

Even with a dead cat bounce, it would present opportunities for the savvy investor to do some flipping / scalping.

Just remember, it's always best to be early to the party than late. The ones that show up early might be twiddling their thumbs for a little while, but they're going to be there for all the action when it starts. If you get the right deal at the right time, it doesn't matter what time it starts, because you should always be in a good position regardless.

Look at some of the deals on here... people are making really good money in real estate right now, even with this "terrible market". The reason is they aren't taking any deal they can find, they are taking the right deals.

Well said. That post by DGadmin could possible be the most important post on this site. I agree with absolutely every word. I also study the markets very closely. The stock market parallels the real estate market in so many ways from a technical stance. Please, if you are not buying real estate right now, start buying. If you study hard, learn everything you can, put in a lot of low offers you will find some great deals. Those who buy right now will be rewarded. Yes, it will be hard if you don't have good credit,a job, or any money. Figure out why, change what is broken, and get busy. It is worth it.

My thoughts... I agree almost 100% with DGAdmin.

But to answer the question.. yes, this is a pretty unique situation. Not that prices are dropping but the nature of the drop ie the length of time and even more so, the amount of price drops as well as the widespread nature of it.

I think that anyone in RE for the long term will be fine. But you can't count on appreciation in the short term. If the deal doesn't make sense right now, figuring ZERO appreication, then you cant pull the trigger.

I think 08 will still be a bad year for RE maybe turning in 09. But every time it looks like all the bad news is out... it ISNT.

That is what I love about holding property for the long term. If the market continues to be "Bad" I will simply continue to buy more rental properties. Also, the lessons learned buying in a bad market are more important than the property itself. Anyone can buy and sell and make a profit during an upswing. Champions are created when everyone else sitting on the sidelines. The window is still open but only for a little while longer. Buy right now.

CBR is right... the window is slowly closing.

The media reports on foreclosures are getting less drastic. News reports are starting talk about areas that are rebounding or slowing down in foreclosure rates. Congress is poised to pass a $300 Billion bailout on mortgages with high rates. All of these things dictate the perception.

When people start believing the market is solidifying, whether it is or isn't, owners are less apt to take a hit and let you get deals, so are banks holding properties. You need to start taking action. Don't rush to buy anything, you need a good deal or you are setting yourself up to lose money instead of make money. But, if you've been sidelined too scared to do anything, your fear is going to keep you from pulling the trigger on opportunity that may not be seen again in your lifetime.

Let's make some money people, while there is still easy money to be made!

-DGadmin

My guess is that you have a good 6-12 months on foreclosures.

Even then, it's not going to be back to the Wild, Wild West.

Remember that lending standards are nasty tight. That isn't going away even when the foreclosure inventory does. It should still be a good market for owner financing (both as a buyer AND as a seller).

In fact, it might even be a BETTER market for investors when the buyers start to return.

Not only will the market turn around but it will turn around in a hurry. I am saying that it will happen in less than three years. Here is the reason. Simple mathmatics, the election, and educated buyers. Please document this post , print it out and hang it on the wall. Let's talk about the reasons I list.

1.) Simple Mathmatics- There is a population explosion going on right now. With more population comes more demand for everything. Have you noticed that small retail shops, office buildings, restaurants etc. have never stopped building. Go to the most depressed markets in the U.S. (I have) and literally see all the new developments going on. It's amazing. They just keep building. Why? Because the demand is there for it. There are currently 80 million people right now between the ages of 15 and 25 waiting to move out of their parents home. There are also 83 million baby boomers getting to retirement age and wanting to move! The new construction starts have shut off and a bubble is starting to form. What is holding them back right now? The media! Many of them can qualify for a home loan if they look hard enough but they are to scared to. The others that can't qualify will be able to in about 2 years. Why? That takes us to number 2.

2.) The election. It doesn't matter who gets voted in, either party is going to try to revive the economy by opening back up the standards to get approved for a home loan. I can even see lower credit score loan programs being created to allow first time home buyers to buy no money down at a low FIXED rate just to stimulate homes sales. The downfall is that if a democrat gets voted in the taxes will go up which will cause everyone's paycheck to get smaller, allowing them less money to spend on a house payment. Right now people are begging for a place to live on their own. This housing mess has caused too many people to have to sacrifice by moving in with someone else, and they want out. Which leads us to number 3.

3.) Educated buyers. Now people are starting to learn that they can't keep financing and expect to keep buying. Reality is setting in. Now they are forced to live more frugally and with other people and they have figured out that maybe saving a little money is a good idea. People are still making as much as they were before this mess! Unemployment is about the same as it always has been. As they save money for a down payment, eventually the MEDIA will give them the go ahead to start buying and the frienzy will be on again. Kind of like what happened after the great depression only in a shorter time frame. History repeats itself.

How do I know all of this for sure? Here is why. I am heavily entreched in real estate. I am involved with it every day of my life. I don't have a family, a wife, or kids that distract me. I deal with the rental world on a daily basis. I deal with the buying world every day. I don't sit on the sidelines waiting for something to happen. I am currently buying several properties every month. I turn around and rent those properties out every month. The rental market is way out of whack. Why on earth would you ever rent a house for $1000 per month if you can buy that same house and pay $500 per month? You wouldn't! Unless you were scared, or your neighbor told you not to buy, or everyday you watched the news you saw how the world was coming to an end. Listen, once the smoke clears and people see the truth things will change in a big hurry. Be prepared and profit. Or sit on the sidelines and wonder what happened. I want you to succeed. Get it done!

Powerful post.

Im not nearly as optimistic as cbr.

Yes, the boomers will be retiring. But I actually see that as a negative. They already have their houses. Many have TWO. If anything they will be looking to trade down or out. Sure, it may help locally as they move to warmer places but I dont think the net will be a big positive.

First time home buyer programs have always existed and still do. FHA is a great program and when combined with either state/local programs or non-profts then it can NMD as well.

People rent for many different reasons. Owning a rental is strictly an investment (money) decision. Owning your home is a LIFESTYLE decision- at least as much as a money decision. It comes with a lot of responsibility (upkeep, lack of portability etc). And it's just a different mindset. Some people will never have it- or want it.

What cbr, Rina, Anita and I are seeing.. may all be different. AND all be correct at the same time.

Because we are all looking in different places. And ultimately all RE is local.

Currently there are over 4 million baby boomers renting and that number is expected to grow EXPONENTIALLY in the coming years as the baby boomers retire according to recent studies done by the National Association of Realtors and Harvard. Many of the baby boomers 2nd homes were lost in the mortgage crisis the US has gone through, some even both of their homes unfortunately. The major foreclosure states point to that fact(Florida, California, Arizona). Nearly 40 percent of the baby boomers say they have a hard time making ends meet according the to mentioned study. So....with the young group I mentioned, the echo boomers (ages 15-25) and the baby boomers added together you get about two thirds of the US population. 35% of the echo boomers are predicted to buy or 28 million people!!! Then to make it even better the other 52 million are expected to rent!!! and 20% of the baby boomers are expected to rent also!!! Which leaves at least part of the 80% looking to buy!!! Now I haven't even mentioned the expected 40 million legal immigrants that are expected to move here in the next few years! WoW!!! No matter how you add it up it is going to be an impressive opportunity for those who get prepared. I will let time prove me right.

Basically here is what I am getting at. I am not spewing opinions based on a guess. My opinions are based on facts. I am just trying to help people get motivated to act now. The only thing it does for me to send out a post like this is create competition for myself. But I feel the opportunity is so large it doesn't matter how many people start investing the result would be a mere blip on the radar screen. I have absolutely nothing to gain by sending out this information. Yes some area will grow much faster than others-so invest where the growth is. When I got started investing my very first piece of real estate I ever owned was 450 miles away from where I lived. Not because I liked driving 16 hours round trip to invest either-it was a huge pain and very hard to do when I knew absolutely nothing. It just made sense to buy in the areas that were growing. Trust me, I am not that smart. Which has been a good thing. If I would have been born a lot smarter I would have probably tried to do more on my own instead of creating systems to do the work for me. Thanks Mom and Dad!

to know thanks cbrpower. It gets me very motivated to know these types of posts. Like today, my wife and I did just that get motivated and maybe found 2 houses that we could get; One as flip purchase and one as a rental or lease option. Its a little scary but also very exciting, it gets me up and going and makes me just talk and talk which I'm not a talker. You gave some good advice which I took to heart since it came from someone who was like me which was someone who was working 65 hours a week and trying to learn at a fast pace but having trouble remembering everything and you gave good advice. Thanks. I will try to keep everyone posted on what happens. Wish me luck!

You live in a great area for real estate. Phoenix is one the biggest cities in the US poised for growth. Prices and market conditions have never been better to invest. You can profit from investing there now and receive great appreciation in years to come. Also, Tucson and Yuma are both poised for growth. Keep an eye on those cities. The window for great profits won't be open forever. Study hard, work hard, set goals, and claim your victory.

The other question is what is going to happen with Alt-A. Whatever issues that may/may not have will be coming online in another 9ish months.

Also, what happens when the REO supply is absorbed? An immdeiate bounce? Flat? Or back to typicaly upward trending?

I don't think ANYONE knows the answers to these questions.

No one knows, but that is why we speculate.

Traditionally, high price volatility creates stiff corrections in any instrument. There was a time I charted housing prices in bollinger bands to measure price trends against volatility. Here's the scoop...

The housing "bubble" broke the upper bands, which made the "popping" an expected occurance. The drop in prices then broke the lower band. This means for me I would expect nice correction.

The caveat is how long it takes to make the correction. The longer the market stays low, the more the moving average creates a lower baseline for the bands, which means the current prices eventually would not fall outside the range, considered volatile.

So all we can go is guess, or sit back and wait for solid trends to emerge. Right now, I feel very comfortable guessing, so long as I am properly insulated by having the properties purchased at large discount to account for any further drop and have a strong chance of turning profit (even a small one) immediately if I want to exit.

When the REOs are mopped up, I am putting my money on it bouncing a few points across the board. After, whether it continues, goes flat or drops is up in the air, but it would seem reasonable that another drop from there would be the more unlikely of the 3.

As far as Alt-A loans, I don't think there will be a meltdown there. Here's why...

The people who were in too deep likely realized it much sooner. Those people who are in bad shape have already likely been accounted for, either through default or getting out of the property/mortgage. Since these are people with great credit, they are likely going to do everything they can to not default. Whereas people with not so good credit were just saying "oh well" in a lot of cases when it came to paying a mortgage that was more than they cared to pay because it was now way more than the house was worth, or those that couldn't sell their house for whatever reason. Alt-A's are more likely to tighten the belt real tight to make sure the mortgage is paid and stick it out.

In perspective, I have friends in Alt-A (stated income) loans that are grinding it out even though it is rough. I have had a couple not so credit conscious friends just walk away from their places when they lost 50% of their value from the top. This is a pretty small sample, but the nature of the loan would suggest this is probably a common theme.

I think the true dictator in the Alt-A's is the economy. If they have grinded it out this long without bailing, they likely can/will continue to, so long as they don't lose their income. If it goes down across the board in all sectors and walks of life like the Titanic, then I could see Alt-A playing a larger role.

Plus, like Mark mentioned earlier...every city in the US has been affected by this downturn differently, so naturally the rebound will also vary. In the Iowa market things have already started on an upward trend because that area never had accelerated appreciation, there was never a bubble to burst. When you can buy a house for what the price of a car is, it is very hard to drop below that. My personal opinion is that in the southern states like Florida, Arizona, and California will rebound fairly quickly once they start to move. I plan on moving to Florida when the trends change, just to invest. The property down their has become very affordable and the ONLY reason that market has not already begun to rebound is out of the sheer numbers of vacant homes. Most people have short memories. Once things start to turn around people will forget all about the problems of old. Look at 9-11. About a year after that happened it was pretty much business as usual. The media plays the biggest part of the whole equation. The media controls more than most of us think.

Unique?

Lowest Interest rates in 40yrs

Properties at pennies on the dollar

Face it NOW - if you're not investing in Real Estate TODAY...

WHAT are you waiting for?

THANK YOU Dean!!!