Real Estate Investors - Red Alert

How's the real estate marketing doing? Is the huge jump in home prices that is evident in some areas symptoms of a value bubble? Good questions, yes?

Two things to keep in mind when surveying the market:

1. All real estate is local, 2. Real estate is cyclical.

Here in Arizona some residential areas have seen as much as a 30% jump in value in the last 8 to 12 months. The word about increasing Arizona home values has spread across the country. We recently sold a home to an out of state buyer who never looked at the property. His agent is just buying homes, because the buyer is sure prices will continue to escalate.

In the case of another of our houses a buyer offered $2,000 above our asking price on the day we posted a for sale sign on the property. We were asking more than we expected to get!

At the same time we received a telephone call from a relative living in California. He was very excited because his brother-in-law was sure he would get rich by buying a couple of Arizona homes. Should her do the same, he asked?

Such events have all the earmarks of a price bubble... if only in Arizona. On the other hand...

On a recent trip to Buffalo, New York, the local newspaper ran a story explaining that home sales were up. In the same article it revealed that the median price of a home had dropped. In other words, people are hurrying to buy homes that are dropping value. There's more...

Mortgage Banker's Association data shows that adjustable-rate and interest-only mortgages accounted for nearly two-thirds of mortgage originations in the second half of last year.

Loans of that type help push up housing prices, because they carry lower initial monthly payments, enabling borrowers to purchase more expensive homes. Basic economics... if more people can buy homes there is more demand... More demand means higher prices.

The rise of interest-only loans, coupled with acceptable higher debt levels for borrowers and tightened bankruptcy laws will probably soon lead to an increase in foreclosures.

If you are buying a home with an interest only loan and the value of that home drops... it is very easy for the borrower to just walk away from the payments. After all, they've built no equity in the property.

Both the Clinton and Bush administrations have pushed a policy of low interest rates and easy mortgage loan qualifying. If every voter has a home they are happy and will vote for the party in power seems to be the limit of political thought.

The truth may be that the government is setting people up for failure and financial pain. Far to many people are buying homes they really can't afford. When interest rates rise... as they surely will... all those adjustable rate loans will act like debt-traps. Interest rates will go up while wages remain stagnate. The result? More foreclosures and financial ruin for many.

There are international forces at work that will not continue to support our government's wild spending habits by buying its low interest bonds. Interest rates must rise. sooner or later?

Bubble or normal cycle... it makes little difference. If you are an investor consider selling some of your properties to raise cash for the awesome opportunities ahead. You know, buy low - sell high.

In our opinion, there is still profit opportunity if you buy at least 30% below current market value... with owner financing.

Prepare now for the coming wave of preforeclosure opportunity. We recommend the guide to preforeclosure profits you will find here http://digbig.com/4dmff

About The Author: Mark Walters is an investor-entrepreneur helping other investors from his Web pages at http://www.Lease-Option-Sub2.com

---

Making Money In Real Estate - 10 Ways

Making money in real estate is an endless topic that... Read More

11 Steps Away From Buying a Home

There is no doubt that the market for houses has... Read More

I have a buyer for your property and I can sell it now!

A Realtor has just talked to you and said, "I... Read More

The Benefits of Fractional Ownership in Private Residence Clubs

A New Way to Own a Vacation Home - For... Read More

Florida Investment Real Estate and What Are Considerations Before Buying

Investment Real Estate, First Things FirstConsidering investing in property? What... Read More

Before Selling Your Home

Here are some important steps you should take before you... Read More

Where is the Sophisticated Property Investor Putting his Money?

The Traditional FavouritesOver the last five to ten years, UK... Read More

At Home In Your Overseas Home

Homeownership, in any form, is a big step for most... Read More

Achieving Positive Cash Flow from Your Real Estate Investments

Even if you're counting on rising property values to eventually... Read More

Real Estate Investments

Real estate investments come through a variety of different options.... Read More

Real Estate Negotiation Secrets

When you bought your home, you offered less than you... Read More

Late Mortgage Payments Sabotage PMI Cancellation

There's something you should know about PMI!Private mortgage insurance is... Read More

FSBO: For Sale By Owners Chapter One

She reached the phone on its second ring. "This is... Read More

Buying a House in Scotland

Buying a house in Scotland is slightly different from buying... Read More

Why Average Sale Price Statistics are Misleading

One of the most common statistics used when gauging the... Read More

3 Strategies For Buying Property With No Money Down

Everyone has heard a story or read about someone who... Read More

Investing in Real Estate for Your Retirement (and Now!)

You've probably heard a lot of opposing information about Investing... Read More

Buying a Home: The 5 Biggest Mistakes that a Home Buyer Makes

As a Professional Real Estate Inspector I get to see... Read More

Real Estate Investing and Home Ownership

If you already own your home, you will probably make... Read More

The Nose Knows

If you plan on getting the most from the sale... Read More

Successful Property Letting And Management

Successful Property Letting And Management is not something that just... Read More

Tax Free Exchanges: Watch out for the New Residence Rules

On October 22, 2004, President Bush signed tax legislation that... Read More

Kings Bay Georgia Real Estate - Be Picky When You Choose your Realtor!

I have been a mortgage lender for many years and... Read More

Financing Houses

What Real Estate Lenders Look ForLenders control many programs --... Read More

Is Second Home Ownership In Your Future?

According to the National Association of REALTORS® (NAR), a record... Read More

Real Estate Investing Skill Acquisition

Real estate investing is not in any list of high... Read More

Stay Motivated With REI Till The Deal Comes

I know many investors step into the game of real... Read More

Destin Florida Triples In 3 Years

Do you want to see something that is absolutely amazing?... Read More

Writing on the Wall - Are REITs a Better Investment for You?

When I was a young child I had many annoying... Read More

Estate Agents on the Costa Blanca Spain

Properties for sale or to rent on the Costa BlancaAs... Read More

Why Are Mortgage Notes Discounted Anyway?

When real estate note brokers purchase partially paid notes, they... Read More

Using Transformation Psychology to Sell Investment Properties

Satisfying and lucrative real estate investment depends upon your correct... Read More

Questions Investors Should Ask When Buying and Selling Investment Property

If you're a real estate investor, here are several questions... Read More