Thursday, July 4, 2013

Real Estate and Investment Property Outlook For 2011

If you are interested in rental property investing, then you certainly want to be up to date on the latest trends in the industry. This will help you know whether to get in the game, or sit on the sidelines. Here is the 2011 outlook to help you determine what your course of action will be.

The trends for the start of 2011 will continue to follow what we have seen in 2010, as many have anticipated. For example, mortgage rates are still at historically low levels. This is primarily because there is still a large amount of supply in the market, which has reduced demand.

Additionally, the supply figures from the NAR and similar associations do not reflect the so-called shadow inventory, which consists of properties going through the foreclosure process that have not yet hit the market. Some of this lag may even be intentional by the banks that own these properties, as generally speaking it is better to gradually put them on the market, instead of in large batches, to avoid flooding the market. Introducing them too fast would mean the house prices would fall even more. But whether intentional or not, the bottom line is that the supply is even higher than what can be measured.

As is usually the case, real estate tends to reflect the economy as a whole. You can see the yin/yang of this when comparing the real estate market to the US economy in 2008 and 2009. High unemployment and similar economic factors created a spike in foreclosures that is now impacting the supply/demand equation of the market. The spike raised supply by putting more houses in inventory, and reduced demand because those people who saw their homes foreclosed upon are not in the position of being able to purchase anything anytime soon.

The good news is that the US economy is expected to improve in 2011, and therefore some analysts are anticipating a slight increase in housing demand and prices this year. Of course, this assumes that the real estate market has already bottomed out, which remains to be seen. Remember, some people were also expecting this to happen in the latter stages of 2010.

What this all means for the investment property seeker is simple: prices are low and bargains abound. Thus, from a pure price perspective, if you want to buy a property, now is the time. Of course this assumes that you have a sound real estate investing strategy. In other words, this is not a great time to flip houses, as you may struggle to find qualified buyers. However, if you plan to hold and rent out the property for at least several years, you should be good to go. This will bring in some short term income, while at the same time giving you property that you can turn around and sell for a big profit down the road.

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