The New Housing Correction: The Good, Bad & Ugly Truths
It’s becoming impossible to ignore the new housing correction in the works. It brings some big challenges for those in real estate, but also some great opportunities. Here’s what you need to know, and how to make the most of it…
The Bad
Declining property prices aren’t much fun for most sellers. Some key markets have now been in a year long decline. Some double digits could soon really snowball. The National Association of Realtors reports that nationwide existing home sales fell 3.4% in September, after a stagnant August. New homes sales fell for the fourth month in a row. Nationally new home sales are down an average of 5.5%, with the Northeast seeing a new 3 year low for sales.
A large percentage of property owners are slashing their listing prices. Even as of July 2018, prices were down significantly in San Antonio, Austin and Honolulu. Some NY markets are seeing deep double digits cuts.
You don’t want to be stuck in the middle of a rehab project that you hoped to list at a new market high, only to find the bottom has fallen out of the market before you are finished.
The Ugly
By now everyone should be fully aware of these market fluctuations and cycles. Homeowners and investors should be prepared for them Of course, many won’t be. Worse than the actual declines, is the fear that can grip markets. That fear is usually more damaging than logical corrections. The biggest threat to investors, homeowners and the market is that, doubled with the hangover of 2008, many will give up on buying and homeownership. They just won’t buy. That could be compounded by any downturns in the stock market, wider economy and tightening of mortgage lending. It doesn’t matter if you are buying properties for $1 if there are no buyers to flip them to.
The Good
On the brightside this brings opportunity to buy lots of property from lots of motivated sellers. If they act fast they may still walk away with cash. Lots of individuals and professional buyers have been waiting for this moment to take action too. So do anticipate many home buyers sitting on the sidelines with good credit and incomes. Do expect there are cash rich investors out there who have been waiting for slightly better asset prices. This is especially true when property prices get low enough to generate attractive returns as rentals. This means opportunities to quickly wholesale houses. Get n out and paid before values go down further. All with low risk. It’s just a matter of having the buyers lined up. Those that get working on these lists and relationships now can find this is one of the most transformative moments in their lives for making leaps in income and wealth. Are you ready?
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