Real Estate Investing & The Firming of The Housing Supply
Seems as though the Press is finally affirming what we real estate investors have been seeing for months “The availability of distressed homes through foreclosures and REO sales is down dramatically”. This drop in supply (at least temporarily) is firming up pricing and helping the homeowner move their home while bargain basement competition slackens. Many investors who run strictly by the numbers are having a harder time finding distressed homes that hit their target market pricing.
Yes, it is pushing the problem forward -one that we still have to face and work through; however, one could argue that it’s creating some short-term stability why we heal (or offset other headwinds) in our economy. Of coarse, there is an unseen cost to all this and it will be one absorbed primarily by us (The U.S. National Debt) through our government.
While we are in this pause as our Mortgage Lenders negotiate a way to work through the hair of the ‘robo-signing’ effects, our leaders would be wise to finally realize and/or admit as to whom it is that will soak up the majority of this dead housing inventory. Care to guess who that is? How about YOU – a real estate investor. In reality I thought it would be worked out already and we’d be feeling the effects of this surge of homes on the market -looks like it won’t be till the end of 11′ or beginning of 2012 at the earliest.
I have been stating for over 2-3 years now that the way of soaking up the excess housing inventory is by providing lending to real estate investors backed by the government (just like individual home owners). Sure -we need responsible lending. Care to guess the last time this succeeded? How about during the Savings & Loan Crisis when over 750 lending institutions went bust. I don’t want to get political; however, this is one of many insights as to how the people at the top are running our country. Folks -we don’t have to reinvent the wheel -simply repeat what works. Other thoughts can be read at: “Wake Up Washington”.
So the good news for now is that wholesaling of real estate investments is coming back for those that know the ‘art of a deal’. We’ve even been party to some transactional funding here in Charlotte, NC. through our hard money lending operation. The best of all is that those whom are experienced in ‘rehab-to-retailing homes should have a very open window of limited competition through next Summer. The downside will be more competition and marketing towards the direct owner purchase and an eventual cascade of distressed homes from lenders. That will spell tremendous opportunities; however, create additional stress on home sales -especially if your attempting to sell a rental or a basic home (not fully rehabbed).
As you already know, we are a long way before we get through this. We are a good 3-5 years for what I call a supply/demand stability. I’m not calling for rapid appreciation; however, wealth will be created during this time for those that take advantage of good prices, good quality, and/or financing terms. Take advantage; however, for rentals (long-term holds) the fruit won’t be truly borne for many years down the road. As I stated in “Blood In The Streets”, 2011 won’t be pretty, but don’t let it stop you from making educated advances.
What’s next for the talking heads (Press)? Perhaps a firming of prices (due to supply constrictions), a settlement in robo-signing which will start a onslaught of relocated familys & housing supply, tighter vacancy rates, home sales increasing on a year over year basis starting for the month of July 2011, or government backed investor financing? I know what I’d like to see but there’s no telling what direction we’ll go in this wild ride we all call life.