Real Estate Growth: How Long Will It Last?

There has been speculation in the media recently about the fact that real estate will begin to fail and implode as it can only handle so much growth. In my humble opinion these theories don't hold a lot of merit and here is why. First, understand that there are three basic things that undercut the validity of saying that there is a real estate bubble that people are operating in.

1. There is no "international" or "national" real estate market.

2. The real estate market doesn't explode or crash.

3. The market has limited impact on the seasoned investor.

The Real Estate "Market" is an overall view of micro markets nation wide.

When people talk about real estate economics they are usually referring to national or international statistics which in truth are made up of thousands on micro or local real estate markets. So even though you might find a North America wide trend there are still many, many markets which will be completely at odds with the overall numbers.

Real Estate Markets do not "Crash."

We all remember October 19, 1987, known as "Black Monday." The stock market lost 22% of its value in one day - what investors call a "crash." History points to times which real estate values have taken 22% hits in certain cities and in pockets within cities. However, no real estate market dropped 22% in one day, one week or even one month. In fact, the real estate "crash" of the late 1980's took several years to bottom out in most markets.

Keep in mind too the overall performance of the real estate market you are investing in. Those of you who have been active in the Edmonton market the last few years might think that the market is in a slump or downslide, when in reality the numbers they are recording are far above what the average of the last decade show.

The market has limited impact on the seasoned investor.

No matter if you are holding properties long term or doing a quick flip, the local market changes will not affect you in a major way if you are careful. For example if you are doing long term hold revenue properties there is little to no chance that the market will not increase over the term of your holding period. If you are on the other hand flipping properties then you will buy at a higher price in a strong market and will move the property quickly, or get a better price which will help you in higher holding costs in a softer market.

Now, just as a side note for those of you looking at holding properties for future value considerations. If you are buying negative cash flow properties with the expectation of equity increase over 2-3 years then, in the words of a recent article that I read, SHAME ON YOU! If you are using investor's capital to close these deals and the value doesn't increase what are you going to do? What if the value decreases in that time? You are putting investor's capital at risk and as far as I am concerned are acting as an irresponsible speculator, not a seasoned real estate investor!

Steele Tolman teaches people how to successfully invest in real estate through the "Zero Down In Canada Real Estate Investing Home Study Course," web mentoring and seminars. http://www.motivagroup.com

More than 40 states signed onto a proposed $25-billion deal with major mortgage servicers over faulty foreclosure practices. New York, Nevada and Delaware joined California in holding out for better terms.

More than 40 states signed onto a proposed $25-billion settlement with major mortgage servicers over faulty foreclosure procedures, but California, New York and other key states were still not among them.

California has until Monday to share in a multi-state deal with banks to obtain mortgage relief and reforms. Atty. Gen. Kamala Harris, who walked away from talks last year, says the door remains open.

With a Monday deadline at hand, California officials have resumed direct talks with the Obama administration about joining a multibillion-dollar, multi-state mortgage settlement with the nation's largest banks, a source said Sunday.

The talk show host pays $12 million for the 4,088-square-foot house with four bedrooms and four bathrooms. The ocean-view home sits on 1.26 bluff-top acres with beach access.

In one of the more talked-about transactions in town, actors Brad Pitt and Angelina Jolie have sold their Malibu beach house to daytime host and comedian Ellen De Generes for $12 million.

The four-bedroom, five-bathroom house built in 1920 for industrialist James Wigmore lists for $2,875,000.

A decorative cast stone entrance opens to this restored Spanish Colonial Revival-style house in Pasadena's South Orange Grove area. Built in 1920 for industrialist James Wigmore, the house retains such original details as coffered wood ceilings and arched doorways.

They don't believe they can sell their property for what it's worth, so they're spending money on making their homes more comfortable.

Do you fit any of these descriptions?

A biennial research report by the National Assn. of Realtors indicates that a handful of real estate agents and brokers and their clients either don't know the law or don't care to follow it.

When it comes to lawsuits, real estate agents and brokers tangle mostly among themselves.

The president aims to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages.

 

The White House hopes to help millions of homeowners lower their monthly mortgage bill with a $5 billion to $10 billion plan to set up a streamlined refinancing program for people who are current on their payments.

The Standard & Poor's/Case-Shiller index of 20 large U.S. cities fell 1.3% in November from October as foreclosures continue to drag down the housing market.

Three straight months of home-price declines in the biggest U.S. cities showed that foreclosures remain a significant drag on a housing market that is entering its fifth year of deterioration.

L.A. Clipper Chris Paul may be quick down the court, but he moves pretty fast when it comes to buying multimillion-dollar real estate too.