Real estate bubbles, strategies, and the current market
Are we in a bubble market ? Just read from one of my favorite bloggers who boasts: “15 flips currently in progress. 126 flips completed. 15 rentals properties. Follow me to see how I make money in any market cycle.” So here’s the excerpt & my ‘reply’:
- “…Low-money-down loans have been available for decades, and that is not what caused the housing crash. Really bad loans to people who should not buy houses is what caused the housing crisis. …”
- reply: I’m presuming this is a ‘cliff notes’ take on the market since we can’t dispense all knowledge in a post. But my quick 2 cents. As a 2nd generation broker/investor/finance degree holder, bad loans where just a part of the problem. We had funds flowing out of other ‘under performing’ investments…e.g: $’s tend to move from CDs to collectables to stocks to real estate, etc. Further, and this makes the topic more of a localized thing, wages must support prices. Las Vegas had speculators running up prices but buyers weren’t all from out of town so prices couldn’t be sustained. Here in NW Detroit suburbs, we are seeing a lot of new industry coming in and hence price strength above what might be healthy in other parts of MI.
The article goes on to say how the market is not at a bubble stage. I think that greatly oversimplifies. So whats the point I’m making? As in Ecclesiastes 3 “To Everything There is a Season.” With-in 30 miles of each other, I have client investments of which 1 area I feel should be liquidated asap as the appreciation has come fast and peaked, the other could be held for a taxpayer that needs deferred income and no cash flow now, but if cash flow is needed move on. In other words:
- Look at: investor needs (cash, retirement savings, …)
- Investor tax situation
- Investor has more time and abilities or more cash to throw at the portfolio mix
- General economy but also local economic outlook…. very important.
This isn’t like buying a candy bar.
This is not an offer of a guaranteed return. Always do your due diligence before investing.