5 Things To Be Thankful For In Real Estate

5 Things To Be Thankful For In Real Estate

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Yes, I said it. There are still things to be thankful for in Real Estate. With that bold statement here goes:

5. The Europeans are coming. The Asians are coming. The Middle Easterns are coming. One of the wealthiest investors in the Middle East was on CNBC yesterday and stated unequivocally that he sees tremendous opportunity to acquire U.S. housing assets over the next 3 to 12 months. We are currently in conversations with a hedge fund out of Asia that is interested in purchasing $500 million in U.S. real estate assets.

The significant depreciation of the dollar has made U.S. housing assets ridiculously cheap compared to expensive European real estate. Foreigners are investing in California, New York, Florida, Arizona and other markets that have fallen but show strong long term demographics

4. Expats and Canadians are actively considering U.S. real estate. Canadian Boomers are tired of living in severe winter conditions need a respite and Florida is just the place to offer it to them. Canadian real estate has held up extremely well and the depreciation of the dollar has many Canadians considering a second home purchase.

3. Interest Rates - 30 Year at 5.25% by April? The economy and consumer confidence are declining monthly. The subprime mess continues to unfold. At least 2 additional Fed rate cuts are in the offing. With a continuation or worsening, we could easily be seeing 30 Year mortgages at 5.25%.

Declining interest rates are reducing the benefits of renting versus buying. Our anecdotal conversations with renters indicate that renters whether it be Miami, Orange County or New Jersey are renting but plan to buy once prices come down, rates come down, or whatever their reasoning may be.

2. Inventories are stabilizing. Rental inventory in parts of Florida where I reside declined from month to month for the first time in many months. New construction starts have plummeted, another piece of good news. Each of these factors are critical in setting up the stage for a recovery in housing. As the sub prime mess unfolds it is going to get tougher for buyers to get financing. Expect the numbers of renters to explode over the coming months and rental rates to rise.

Here's why rental inventory is more important that sales inventory. It is rental inventory that needs to decline before rental rates can stabilize and start rising, which will at some point make purchasing a better decision than renting.

1. And the number 1 reason to be thankful .... If you are a real estate investor or homeowner, congratulations! Real estate is still the best long term wealth building asset available today, despite what the manic media would have you believe. The media has made people fearful of owning real estate ownership. Ask someone that bought a home in 1990 if they're glad they did. You have made an attempt to build financial freedom. All that is required is patience. Remember that even 3% appreciation in real estate is equivalent to 30% appreciation on your money at 10% down.

The worst thing you can do today is panic and sell. Think ahead for yourself and stay patient. Stay focused on your future financial freedom. I'll put my money on someone looking to improve their lot in life any day of the week over someone that accepts their situation and is unwilling to do so.

Think about what you need to do to maximize the cash flow of your investment. People will always need a home to live in. New construction starts have disappeared but population is still growing. Because the correction has been so severe, there are a ton of buyers waiting for rebound and by definition the snap back will also be quite sharp. Happy Holidays!

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