Odd California Foreclosure Bill Fails

A bill that would have fined lenders $1,000 a day for having an ugly REO failed in the California legislature.  A growing problem of vacant, ugly, lender-owned properties has been blighting neighborhoods.  While I do agree that banks have a responsibility to keep up their REO homes, I don’t think a statewide rule is the answer.  Local municipalities have code enforcement rules about keeping up properties and should be the ones dealing with the problem.

Presidential Candidates’ Positions on How to Fix the Subprime

Hilary wants to place a 90 day moratorium on mortgage foreclosures.  How would she and the other candidates fix the subprime problem? 

Read more in this Forbes article:

http://tinyurl.com/2y7fdd

Realty Times Predicts Good Winter for Housing

Realtytimes.com is predicting a good winter for the housing market in general.  The reasons?  Falling inventories and falling interest rates.  The national average of housing supply is 9.6 months, down from 10.1 months in November.  Generally speaking, a six months supply of houses is considered a “balanced” market, so 9.6 months still means it’s a buyer’s market.  But, the direction is more important at this point – if interest rates continue to fall or at least stay as low as they are right now and inventory continues to fall, eventually housing prices in general will start to level off.  While it may seem like a complete disaster in some pockets of the country, the average price of houses only fell about 2% last year from 2006 – hardly a “crash”.

 Of course, all of this talk about “housing” in the general sense is meaningless to the shrewd investor, who looks at local housing conditions within his market, and invests in particular deals instead of markets.

“Everybody’s Down Market is Someone’s Good Market”

A great article from Realty Times puts the entire “housing meltdown” and potential coming recession into perspective: bargain prices + low interest rates = good buying opportunities.

 http://tinyurl.com/yrtkzk

“If you are a potential buyer or investor, a good case can be made that the current combination of house prices at 4-year lows — and 30-year mortgage rates at 5.6 percent and 15-year loans at 5.1 percent — should have you riveted on what’s available in your local market.”

Certainly as a landlord, low prices, low vacancy and low interest rates make a compelling case for buying up properties and renting them.  Inflation also tends to push up rental prices, which benefits those with fixed rate, low interest loans (although hurts the multi-unit landlord who pays for utilities because of increasing energy prices).

The bottom line is that bad markets always present buying opportunities for those who are looking.  “The time to buy is when the blood is running in the streets” says Lord Baron Rothschild.

Weak Dollar Helps Vacation Properties in U.S.

According to a recent study, the weak dollar has result in an increase in foreign vacations in the U.S.

http://tinyurl.com/268a9g

I witnessed this first hand last week while skiing in Beaver Creek, Colorado, an upscale resort where many Europeans and South Americans come to vacation.  Like any other investment, make sure you are evaluating each deal on its own merit, not just investing in a “market”.

Invest in Deals, Not Markets

Too many novice investors try to time the market and ride the waves of market appreciation. Certainly buying and selling at the perfect time (when the market peaks, for example) is the easiest and most lucrative way to invest in real estate. It’s also the most risky because few people have enough foresight to figure out where the top and bottom of the market are.

Instead of trying to guess the bottom and top of a market, stick to particular deals that make sense. In any market you can find particular bargains in solid neighborhoods that make sense. Buying houses at great bargains is easy when the market is soft and sellers are flexible. Even if you’re in a hot market, you can still find homeowners who want to sell below market for reasons other than money, including the stress of a divorce, a death in the family, a job transfer, or other life changes. At times like these, people can be highly motivated to sell their houses quickly. If you’re in a flat or falling market, you can either invest elsewhere or stay in your farm area and buy extremely cheap. Even if you seek emerging markets around the country, you can still end up with a bad deal that won’t make you money.

In short, each deal must stand on its own. The late Will Rogers said, “Buy when others are selling and sell when people are buying.” This may work for stocks because you can get in and out of a deal in a short time. However, in real estate, you can’t expect to time the market in terms of days. Unless you’re in a market where bidding wars occur and prices go up in a matter of days, plan your strategies in terms of months and possibly years.