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5 Reasons For Optimism in Real Estate
By: Neal Sherman
Yes, I said it. There are still things to be thankful for in Real Estate. With that bold statement here goes:
5. Europeans, Asians, Indians, Middle Easterners are actively investing and looking to invest in U.S. real estate and snapping up bargains. The bulk real estate investment market is hot. One of the leading investors in Dubai was on CNBC yesterday and stated unequivocally that he expects to acquire U.S. housing assets over the coming months. Hedge funds out of Asia are also interested in purchasing U.S. real estate assets.
The significant depreciation of the dollar has made U.S. housing assets ridiculously cheap compared to expensive European real estate. Foreigners are investing in California, New York, Florida, Arizona and other markets that have fallen but show strong long term demographics
4. Canadians and U.S. expatriates are active U.S. buyers. Canadians need a respite from the harsh winter and Florida, Arizona, Carolina are just the places to offer it. Canadians are relatively wealthier with the depreciation of the dollar and Canadian real estate has held up extremely well leading many Canadians to consider a second home investment in the southern U.S.
3. Interest Rates - 30 Year at 5.25% by April? The economy and consumer confidence are declining monthly. The subprime mess continues to unfold. At least 2 additional Fed rate cuts are in the offing. With a continuation or worsening, we could easily be seeing 30 Year mortgages at 5.25%.
Why is this important? Because are anecdotal conversations with renters indicate that the consensus whether it be Miami, Orange County or New Jersey is that people that are renting actually plan to buy once prices come down, rates come down, blah blah blah. Declining interest rates significantly bridge the gap that currently exists between buyers and sellers.
2. Inventories are stabilizing. New construction starts have plummeted, another piece of good news. Over the past couple months, we've started to make inroads into the rental inventory. Rental inventory in Palm Beach county where I reside declined from month to month for the first time in many months. It is possibly the start of a inventory reduction trend. Rental inventory has stayed relatively flat for the past 6 months and as the sub prime mess unfolds it is going to get tougher for buyers to get financing. Expect the numbers of renters to explode over the coming months and rental rates to go up.
Here's why rental inventory is more important that sales inventory. It is rental inventory that needs to decline before rental rates can stabilize and start rising, which will at some point make purchasing a better decision than renting.
1. And the number 1 reason to be thankful .... If you are a real estate investor or homeowner, congratulations! The media has made real estate ownership seem like it is to be avoided like the plague. You did something to improve your lot in life. You made an attempt to build financial freedom. Which is more than can be said for most people. And remember that 3% appreciation in real estate is equivalent to 30% appreciation on your money. It is still the best long term wealth building asset available today.
Don't worry. Even if this deal doesn't turn out right. Don't regret your decision to own a financial wealth creation asset. Stay focused on your future financial freedom and wait to sell until the market becomes more liquid. You will be glad you did. In the meantime, focus on opportunities to increase your income and stay positive about the future.
Focus on ways to maximize the cash flow of your investment. Unlike stocks, housing is a tangible asset. People need housing and the population continues to grow each year. People are living longer. New construction starts have all but disappeared but the population is still growing. Because the correction has been so severe, the snap back will also be quite sharp. Happy Holidays!
Article Source: http://www.ezarticles.info
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