The real estate market is so large it is critical to the success of the whole US economy. While the housing market continues to struggle to push its way back the economy as a whole is still sputtering. So are we still at risk of falling back in the whole and who does this affect real estate investing?
While corrections are necessary and a normal part of every business cycle if the housing market doesn’t recover and at least stabilize soon there could be further reaching ripples that affect the financial situation of the entire United States. So we can be sure that continued pressure will be put on by the government to help improve and bring back the housing market especially as the next election approaches. This should be a comfort to those in the real estate investing industry who plan to hold their properties for the long term.
Still there are many foreclosures expected to be filed and hit the market in the next couple of months. The back log of REOs from the end of last year are already hitting and there are currently 5 million US mortgages that are at least 2 months behind. However it is important to note that only about 1 out of 3 foreclosure filings actually ends up becoming an REO. As tough as it is for individuals and families losing their homes we unfortunately really will not still see the recovery we are hoping for until these foreclosures have been completed and housing inventory returns to normal levels. Currently we have about double the inventory a health market should have. Still, this means that there is a plethora of incredible opportunities for real estate investing and massive discounts will still be available for a few months yet.
Of course all real estate is local and while there are definitely many benefits of keeping your real estate investing to your local area the one main factor that is going to make a difference in the next 18 months is employment. Neighborhoods and areas where employment is weak will mean more homeowners losing their homes forcing down values even further. So real estate investing businesses will be wise to also consider picking up bargain priced deals in areas where jobs are more plentiful and prices are likely to rebound faster.