The first time home buyer tax credit has had an effect on the market, but clearly not to the extent or where the government intended.
Affordability due to lack of home buyers and general market softness has continued to make desirable cash flowing properties in well located markets accessible to investors and they have bought extensively. Notice the most dynamic markets in the run up through 2007 (per sample below) now trend to oversold.
Fewer home buyers have been able to qualify for owner occupied loans and fewer loans have be processed due to the banks being unable to deal with the origination volume, short sale requests, modification and REO disposition loads. They are essentially drinking from a fire hose using the same “tin cup” they went to The Feds with, and as a result cannot immediately meet new or existing loan servicing demands.
The silver lining in this for the economy is that the fear of a deluge of REOs hitting the market in a short period of time is unlikely as it would trash values. This would not help the banks, sellers or Realtors©.
Fear subdues price appreciation which is good for investors who are out buying en masse. This should keep investment grade properties available for at least the next two quarters, however well sited rental properties in cash flow ranges in good markets are getting harder and harder to find as inventories in these great price ranges ($50K to $200K) and great locations are all most depleted. This was not in the Fed plan. Surprise: their national solution ignores local market dynamics.
The other unintended consequences of this current Federal government largesse and push to retrofit residential real estate for energy efficiency, is that the low hanging beneficiaries of these grants, incentives and rebates are real estate investors as they can recapture capital and monetize these strategies to quite unimagined, yet legitimate ends.
This inventory data and our knowledge of How to Get Maximum Performance from Your Investment Properties indicate we are in a great market and maybe a golden age for investors who know what they are doing.
Below are some high level market statistics for property value trends and inventory levels in major metropolitan areas across the country. You can follow the link in the bottom of the table to your local MLS inventory trends.
For more information on how to find and leverage an inexpensive by high return retrofit strategy, call NEXZUS at 602-241-0800. We have realized significant CAPX and CAPX recovery, OPX appraisal and rental premium improvements many of which are undiscovered by investors.
Article Courtesy of:
Andrew Waite,
Publisher
NEXZUS Publishing Group / Personal Real Estate Investor Magazine
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