What do investors think of a real estate market in which home prices are at best stagnant, but still falling in many areas. There’s no appreciation to speak of in much of the U.S. The “glass half empty” real estate investors would be troubled about their inability to buy, repair and flip for a nice profit. They would be working many times harder to turn up a flip deal that isn’t so risky as to make them lose sleep at night until it’s finished and flipped.
Then there’s the “glass half full” group who see amazing opportunities in today’s real estate market climate. And, even better, it’s not short term flip money requiring another flip to keep the cash flow rolling. Things have changed, but certainly there’s great opportunity for those real estate investors who recognize the trends developing and act on them.
There is a growing group out there who either were previously homeowners who lost their equity and homes, or would-be first time home buyers; and this group is beginning to say things like “we may rent for the rest of our lives.” With one study showing the average American home ownership before the recent crash being about 8 years, it’s easy to see why this group of people is growing. They don’t see an upside financially to home ownership. While things can, and probably will, change at some point, few see any possibility of rising home prices in the near future. At least they don’t see prices rising at a pace that will allow them to recoup their investments with closing costs to buy and sell.
This is a wonderful market for the real estate investor who recognizes the opportunities in buying homes and holding them for rental income. In July, the U.S. Commerce department reported that the percentage of home ownership had declined, a trend that seems to be ongoing. These people didn’t leave the country, just their status as home owners. They all became renters. With more renters, deep discount home prices, and historic lows in mortgage interest rates, the glass is much more than just “half full.”