You hear how well real estate is going…
- Inventories increase when there’s fewer sales
- Let’s see you have rates going up…
- If you talk to builders they will tell you
- This will mean more people stuck in their homes
You hear how well real estate is going, but why is it going so well when you look at the trends. They don’t seem to be going that well. In some of the hottest real estate markets prices have been going up, however inventory has also been going up as more homes are foreclosed on. This increase in inventory should drive prices down. Also, sales are down in many of the markets.
So, how long can prices go up while inventories increase when there’s less sales than there were a year ago? Another thing influencing markets is that mortgage rates are going up, therefore applications for loans are going down.
Let’s see you have rates going up, applications from buyers going down, inventory going up, prices going up and sales going down. Is this what a good real estate market looks like?
If you talk to builders they will tell you that their construction costs are going up rapidly. This causes the prices of homes to go up as well as the prices of materials – even if people want to get a loan and remodel. The remodeling will come to a halt. Additions will not be considered due to costs.
This will result in more people stuck in their homes and not selling. It’s the institutional investors that bought huge amount of properties that drove the prices up, it certainly wasn’t the average buyers. When these institutional buyers decide that they own enough real estate, the market will tumble quickly.
QUESTION: What should readers take away from this message today?
ANSWER: That the thing you always thought was your safest investment will turn out to be your biggest albatross.
QUESTION: Why is this information timely?
ANSWER: This information is timely because people seem to be drunk on fixing up. their homes, and remodeling, and putting on new roofs , and new floors, and painting everything when the market crashes again they’ll be even more upside down than they are now.
QUESTION: How can readers best apply this information to their lives right now?
ANSWER: Look at all the money leaks that real estate causes you to have and make a decision whether to continue down the ownership path.
COMMENTARY: Real estate is the illusion of security, especially for the baby boomers. The baby boomers need to get over seeking security as something “out there.” Hanging on to real estate keeps you stuck, fixed in a lifestyle, and the biggest money pit you will even own. What happened to the American Dream where you were free, and mobile, to pursue life, liberty, and real happiness? You won’t be doing that if you’re tied down with a piece of real estate you can’t afford, can’t pay the increasing costs of ownership, it’s worth less than you owe on it, and you can’t sell! Get current with what is happening now by becoming mobile and liquid just like your kids.