Every has real estate investment tips for Canadians these days, especially agents in the US. We are connected to a group of folks who are serious about the US market, and they have been down there recently just like we have.
Probably the key thing that came out of our latest meeting was that the US market, in the southern states is still sliding. Worse, investors are very hard pressed to buy and cash flow properties in places like Arizona and Nevada. Florida, as we have noted elsewhere, is worse.
But there are rays of sunshine peeking through the storm clouds. There are places, in the northern states, that are still viable investment locations. It is possible to cash flow properties.
The key is to find areas that were not part of the price bubble of 2002-2006. These places are still doing well in terms of rentals and resale. One friend has done quite well with inexpensive properties. All he did was scoot to the northeast rather than the southeast.
While the allure of the sunshine states is pretty strong for many Canadians standing in a snowdrift, I would recommend doing a bit more homework first.
Cheers,
Mike Fears
author@tatinvestments.com
Tuesday, April 15, 2008
Sunday, April 6, 2008
Arizona Realtor Desperation - Real Estate Slide Continues
Arizona realtor desperation showed it's head again this week. I saw a billboard, brand new, that popped up on the fringes of downtown Calgary. It was trying to sell property in Arizona - specifically to Canadians tired of the cold and snow.
Elsewhere I have strongly cautioned Canadians about purchasing real estate in the southern United States right now, including Arizona. Property values are still sliding and realtors are deperate to unload what they have on their books. And things look to only get worse over the next few months.
Billboards such as this one (say another sign trying to fire sale properties in Costa Rica) are going to become increasingly common.
Don't be fooled by the ads and the hype - especially from the realtors. The slide in values is still going on. Investors should be extremely cautious and regular home buyers should think twice before jumping into anything. Any questions can be sent to author@tatinvestments.com.
Cheers,
Mike
Elsewhere I have strongly cautioned Canadians about purchasing real estate in the southern United States right now, including Arizona. Property values are still sliding and realtors are deperate to unload what they have on their books. And things look to only get worse over the next few months.
Billboards such as this one (say another sign trying to fire sale properties in Costa Rica) are going to become increasingly common.
Don't be fooled by the ads and the hype - especially from the realtors. The slide in values is still going on. Investors should be extremely cautious and regular home buyers should think twice before jumping into anything. Any questions can be sent to author@tatinvestments.com.
Cheers,
Mike
Thursday, April 3, 2008
Buyer's Market in US Real Estate - The New Myth
It's a buyer's maket in US real estate - that's what I've been reading in a few blogs and mini-articles scattered across the web. I'm seeing this observation in articles coming from realtors and other real estate professionals based in Florida, Texas, California, Arizona, Georgia, Nevada, and Tenessee. They all talk about the amazing and glorious opportunities in this buyer's market.
Bull twaddle.
The skinny is this: the markets in these areas are crashing. Buy now and watch the value of your assets decline. It's a buyer's market only because the buyer can pick and choose. Buyers are in the drivers seat, if they are cool-headed enough not to pay too much.
Realistically, last year's prices mean absolutely nothing. They inflated by speculation, loose credit, and poor judgement. If you want to look at the "real" value of real estate in the main southern US states, look at prices in 2002, or even 1997. Paying even close to current asking prices is likely to be a losing strategy.
If you are an investor, or just getting into real estate investing, beware this buyer's market. I've written here and elsewhere about some the nasty sides to this downturn - such as the "hidden" supply of foreclosed homes that are being held off the market. Eventually things are going to have to give and values will drop to where they should be.
If you don't care about the value of your assets, or find some pleasure in losing cash or gaining tax breaks, then your need to get in right now. After all, house prices in US cities dropped at least 10 percent in January (The Economist, March 29th, 2008) - you need to jump on the losing side right away. You can still realize a 30% loss, at least, in many areas.
Bull twaddle.
The skinny is this: the markets in these areas are crashing. Buy now and watch the value of your assets decline. It's a buyer's market only because the buyer can pick and choose. Buyers are in the drivers seat, if they are cool-headed enough not to pay too much.
Realistically, last year's prices mean absolutely nothing. They inflated by speculation, loose credit, and poor judgement. If you want to look at the "real" value of real estate in the main southern US states, look at prices in 2002, or even 1997. Paying even close to current asking prices is likely to be a losing strategy.
If you are an investor, or just getting into real estate investing, beware this buyer's market. I've written here and elsewhere about some the nasty sides to this downturn - such as the "hidden" supply of foreclosed homes that are being held off the market. Eventually things are going to have to give and values will drop to where they should be.
If you don't care about the value of your assets, or find some pleasure in losing cash or gaining tax breaks, then your need to get in right now. After all, house prices in US cities dropped at least 10 percent in January (The Economist, March 29th, 2008) - you need to jump on the losing side right away. You can still realize a 30% loss, at least, in many areas.
Tuesday, April 1, 2008
Bear Stearns & The Real Estate Implosion
Bear Stearns proves that the real estate crisis in the United States continues. As was predicted by The Economist some time ago, the relaxed lending by American banks has lead to a crisis of confidence. Now that Bearn Stearns has been rescued, there is mass speculation on who is next.
The near failure of Bear Stearns (actually it did fail as it lost market confidence) points to a myth that we hear a lot of these days. It's the myth that "the worst is over". Like all myths, it is based on some truth - things are worse than they were. But the navel-gazing and talk of last year's values will return is simple twaddle. Many real estate investors are privately turning their nose up at the current market. In some areas it doesn't pay to take it for free - it costs too much to maintain and rents are falling.
The intervention of the US Federal Reserve was unavoidable. The collapse of Bear Stearns point to the rotten undersides of the American financial sector. Essentially, they are doubtful of each other's ability to pay up if necessary. Indeed, their doubt is based on the likely assessment that they couldn't pay up if they had to. Scary stuff. It would appear the emporers have no clothes once again.
For those who may be tempted to the optimistic call for a return to "normal" markets, beware. We have been in an abnormal market for a while. We are living through the correction. Bear Stearns is a shining example of that - not a sign that it is over.
The near failure of Bear Stearns (actually it did fail as it lost market confidence) points to a myth that we hear a lot of these days. It's the myth that "the worst is over". Like all myths, it is based on some truth - things are worse than they were. But the navel-gazing and talk of last year's values will return is simple twaddle. Many real estate investors are privately turning their nose up at the current market. In some areas it doesn't pay to take it for free - it costs too much to maintain and rents are falling.
The intervention of the US Federal Reserve was unavoidable. The collapse of Bear Stearns point to the rotten undersides of the American financial sector. Essentially, they are doubtful of each other's ability to pay up if necessary. Indeed, their doubt is based on the likely assessment that they couldn't pay up if they had to. Scary stuff. It would appear the emporers have no clothes once again.
For those who may be tempted to the optimistic call for a return to "normal" markets, beware. We have been in an abnormal market for a while. We are living through the correction. Bear Stearns is a shining example of that - not a sign that it is over.
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