Real Estate Investing Links for January 20, 2010

Bubbles we’re familiar with such as the California Gold Rush and the dot com bubble are contrasted with lesser known mistakes like the speculation that led to the collapse of the Dutch Tulip Market. Entertaining and informative, this article offers an insightful look at history’s greatest investing blunders.

“Housing Industry May be Headed for a Double Dip”

MSNB outlines signs of a possible “double dip” in the housing market, including a declining number of prospective home buyers. The National Association of Realtors credits the extension of the home buyer tax credit for the decrease in consumer home buying, stating that it is “draining momentum from the summer’s recovery.” In an effort to lower mortgage rates and increase the number of buyers in the market, new federal programs led to increased sales in November, but experts expect a drop when the programs end.

“Loan Modification Helps the Housing Market”

depreciationAlthough critics claim that many of the lofty goals laid out in Obama’s Home Affordable Modification Program have not been met, many analysts say that by restricting the amount of foreclosed homes in the market, the measure has actually increased home prices. Assuming that HAMP’s goal of assisting distressed homeowners by lowering monthly payments will do little to prevent defaults in the long run, many experts view the program as a way to delay “new foreclosures hitting the market.” Read more at the Wall Street Journal online.

“Fed Suspends Anti Flipping Rule”

The “flip rule” barring buyers with FHA loans from purchasing “homes that have been held for less than 90 days” will be lifted for 1 year starting February 1st. According to the North County Times, this means first time buyers will become competitive with cash buyers for a greater selection of property. However, prices are not expected to increase due to anti speculatory measures such as capping “sellers profits to 20% above the purchase cost.”

“United States Still Top Place for Real Estate Investment”

middleDespite recent buzz about real estate investing abroad, the Real Estate Bloggers report on a study of foreign real estate investors naming the U.S. the “most stable and secure real estate environment” in the world. Still, the percentage of people who agree with this statement continues to decline (down 13% from 2007!), while Germany and Canada maintain their high ratings.

“Cities with the Fastest Falling Home Prices”

Forbes.com’s Francesca Levy discusses a nationwide drop in home prices. Though not at 2008 lows, experts fear that the expiration of the home buyer tax credit coupled with rising interest rates could severely impact the already fragile markets. With San Diego heading the list (prices have fallen 7.3% since October), the article analyzes cities experiencing such lows and provides detailed assessments of these trends. Levy notes highly volatile markets as characteristic of the more greatly affected areas.

How to Determine Property Values in Today’s Market

Bill Bronchick of the REI Club offers a quick lesson on how to assess the value of single family homes using the “comparable sales method.” He warns against relying on automated evaluation models that “can be off by as much as 10% or more.” Using timeless suggestions such as comparing your property to similar homes in the neighborhood, this article helps you to evaluate its value based on location, square footage, rooms, and other factors.

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