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Typically real estate markets are local in nature. However, right now most of the country has been affected by downward real estate prices as a result of the economy, high gas prices, the sub-prime mortgage mess, mortgage fraud, over-speculating, over-building, and unemployment rates.
A real estate market has cycles of booms and busts. Right now, most real estate markets are experiencing the effects of the bust, which occurred last year when the real estate market bubble burst across the country. Real estate markets that had appreciated faster than others such as California, Florida, Nevada and Arizona felt the effects of the declining real estate market faster. These areas have experienced record-breaking foreclosures the past year. Many of the real estate markets across the country are starting to show signs of stabilizing and flattening out though. Although prices are generally down from two years ago, sales are starting to come back up throughout the country. Many of the sales are a result of the large inventory of short sale and foreclosure properties that have flooded the market as a result of the sub-prime mortgage crisis.
Hopefully, the last half of 2008 and into 2009 we should start to see inventory declining, with sales rising and prices stabilizing and the real estate market showing signs of recovery.
Investors all across the country have been taking advantage of low prices and abundant inventory and snatching up properties at deep discounts from foreclosure auctions, REOs, developer closeouts, and bulk sales. Now is the best time for investors to buy real estate and either hold it or lease it. For instance, with so many homeowners being displaced by foreclosures, there is a demand for affordable rental property right now. There is also a demand for retirement and vacation properties. Many foreign investors are realizing this also as the Euro buys them more here than in their own countries. Foreign investors are buying luxury vacation homes and retirement hones in areas such as Florida, Nevada, Arizona, and California. With so many baby-boomers getting ready to retire, there will continue to be a demand for retirement properties in these areas. Investors should consider buying retirement properties as well.
Interest rates are still low although credit has been hard to get lately. Now that the government has taken over Fannie Mae and Freddie Mac, perhaps this will reassure lenders, and loans will be more readily available. But expect lending guidelines to be strict for a while until the market rebounds and most of the bank REOs are sold. Investors/buyers with cash right now are at an advantage. If you are lucky enough to be in that position, then you have many more opportunities available to you right now.
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