THE AMERICAN HOME MARKET HAS REACHED ANOTHER “INFAMOUS” GOAL in 2010:
DURING 2010 THE TOTAL OF UNDERWATER HOMES IN THE U. S. WENT FROM 21% IN THE FIRST QTR TO 23% IN THE THIRD QTR TO 28% IN THE FINAL QUARTER. That represents a move toward 30% and on to 40% of the homes which have mortgages.
This is bleak news for homeowners but positive for the owners of Apartment Building Investment properties, especially in nice areas with great schools and services.
There is an additional issue with the Under Water Homes…when the owners sell or short sell or deal with a foreclosure…they will have no equity and probably no cash in the bank. They will be renters, some for life and some for 2 years to 10 years while their credit heals and they accumulate a down-payment. One must have 10% equity to break even upon sale and pay costs…that’s why I predict we’ll be at 35% before long.
AND WHEN FANNY AND FREDDY DIE…OVER THE NEXT 10 YEARS…THERE MAY NOT BE ANY 30 YEAR MORTGAGES WITH EXTREMELY LOW DOWN PAYMENTS!
Some folks will make a pledge to “Never Own a Damn Home Again”, some will buy as quickly as they can.
Interest rates Must Necessarily Skyrocket (to grab a quote from our Pres). For the first 20 years of my real estate career, interest rates did not drop below 8.5%. I’m gonna’ guess that we’re heading that way interest rate wise in the not too distant future. Some “pundits” say several years…some say several months.
MY LAST BLOG WAS THAT THE REAL ESTATE BUSINESS IS IN ELVIS PRESLEY MODE: IT’S NOW OR NEVER!
My advice is that if you want to catch the next up wave…you should own Apartment Buildings. Preferably 2 to 4 unit buildings if you have mor limited funds. 16 or more unit buildings if you have some retirement funds to place (5 to 15 units are a bear to finance and make productive…PRICE is the secret to them).
IT’S NOW OR NEVER…GET TO IT!