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In today’s uncertain economy, there are fewer and fewer places to put your money. The stock market has been experiencing recent declines due to the European debt crisis and a stagnant U.S economy. Hard assets like gold and silver have grown in popularity due to the lackluster performance of the dollar, however, even the price of these asset classes have slid as investors are still trying to figure out the unstable economy. Real Estate prices have taking a beating since the Real Estate bubble collapse, which is why Real Estate could be a great investment- “it’s a great time to buy” mantra comes to mind here. Real Estate prices nationally have fallen 3.1%- pending home sales have also dropped off due to properties not appraising, forcing buyers and sellers to renegotiate contracts or canceling them all together. Great investors don’t make money simply by reading financial statements and the Wall Street Journal. They pick up on trends that they see in the economy that helps them determine what course of action to take when it comes to investing their money. A great article by Doug Casey of Casey Research points out some questions to ask yourself when trying to determine current trends.

• is real inflation likely to rise the next few years?
• is it likely the U.S dollar will be stronger or weaker the next few years?
• is it time to invest in Real Estate again, or will it take the rest of my life to see profits?
• will the global economy be on solid footing during the next few years?

Figuring out the answer to these questions can help you decide how to invest in the coming years. Real Estate is an attractive investment because of record low prices- it’s important to stress that making a substantial profit will be difficult due the real possibility that home prices can continue to fall in the years ahead. How you purchase the property is also an important factor. The saying “you make money when you buy, not when you sell,” is something to keep in mind when purchasing Real Estate. If you purchase with cash or with a large enough down payment on well priced property, than it will be easier for you to profit from rental income or from the re-sell of the property. If you use a 15 or 30 year mortgage, than you’re at risk of putting yourself in a dangerous financial situation.  These are uncertain times-asking yourself the right questions can help you make the best decisions with your money in any economic environment.

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The Obama administration is considering a plan to take foreclosure properties off the market and rent them in order to control declining home prices according to the Wall Street Journal.

The plan would essentially place the government as acting landlord with Fannie and Freddie taking part in the government takeover of foreclosure properties. So far nothing is concrete but the White House is seriously considering the plan.

Since the financial collapse of 2008 the government has done everything to try to stabilize the economy including the Real Estate market. We have seen stimulus packages, bailouts, quantitative easing, first time buyer tax credits, home loan modification programs etc. Has the economy or the Real Estate market improved as a result of these stimuli? The answer is a definite no.

The economy is getting sicker with rising unemployment, debt, and foreclosures as the symptoms. This crisis occurred because the government subsidized the housing market with low interest rates and cheap credit that fueled the housing hysteria to absurd levels. Albert Einstein defined insanity as doing the same thing over and over again expecting a different result.  Mr. Einstein’s definition certainly applies in this case.

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The recent stock market plunge is sending a clear message to Americans, that we are not out of this crisis yet. Not by a long shot. The Dow Jones Industrial Average dropped by more than 500 points in the biggest single intra-day loss since the 2008 financial meltdown.

In my previous blog I indicated that home sale cancellations were on the rise. The reason is simple, Americans are scared. Buyers and sellers are waiting to see what happens next. They do not want to get caught up in a large ticket transaction like purchasing a home when the U.S. economy is struggling to stay afloat.

The epicenter of the global financial crisis was and still is Real Estate. Firms gobbled up mortgage back securities consisting of high risk loans that went sour when homeowners began defaulting on their ARMS.  As the crisis continues, the Real Estate industry will still be caught in the middle as distressed properties take up large chunks of home inventories across the country.

If you are a buyer or seller in this market, you must tread carefully as the U.S economy heads towards uncharted territory. It’s unclear if and when another financial crisis like in 2008 will occur.  In any case you must seriously weigh your options and make sure that if your buying or selling a home, it is a risk that you can afford.

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An article by CNBC reports that home sale cancellations increased by 16 % of pending home sale contracts.  The increase has taken many in the industry off guard including the chief economists at the National Association of Realtors (NAR) who is baffled by the increase, that according to CNBC.

The rise in cancellations shouldn’t be a surprise to anyone, especially those working in the industry. Distressed properties including short sales are difficult and lengthy transactions that tests the patience of both the buyer and seller.

Short sales still make up a big chunk of inventory in states like California, Nevada, and Florida who have been ravaged by the Real Estate collapse.  We must also consider the current state of the economy. High unemployment, out of control debt, and an uncertain economic future are making buyers think twice before they go through with purchasing a home.  To put it bluntly, Americans are afraid. They’re afraid of losing their jobs, their savings and their homes. It’s no wonder why buyers are getting cold feet.

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Since the Real Estate bubble burst several years ago short sales have become a popular way for homeowners to escape foreclosure and  rebuild their finances. Despite the positives, short sales have gained more of a bad reputation as of late, mainly due to the length and complication of these kind of transactions.

Buyers and sellers alike have grown increasingly frustrated with the process since the average short sale can take ninety days to six months. There are cases where short sales have taken up to a year or longer to close.  Many buyers who submit offers on short sale properties end up walking away because of the lengthy process.

The reason short sales are so complicated is because there are so many parties involved unlike bank owned properties where you are just dealing with the bank.  If you decide to purchase a short sale, you want to make sure your Realtor understands the process and is experienced in dealing with short sales.

Most importantly, you need to understand the pros and cons when it comes to short sales. Remember that once you submit and offer, don’t expect for the property to close anytime soon. It simply becomes a waiting game.  If your selling your home as a short sale, make sure you meet with a tax and credit specialist before you decide to short sell your home.  A short sale can have credit and tax implications.

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I absolutely love cars. I know I know your wondering why I’m talking about cars in a Real Estate blog. I’ll get to that in a minute. Anyway, my favorite kind of car are your American muscle cars. I own a Mustang which is an absolute bute. Of course I share an affinity for European style cars like BMW, Mercedes, and others. What does that have to do with Real Estate? Well I think the home you own and where you live should be able to accommodate the vehicle you drive.  You don’t want to be driving your lambo in the streets of New York would you? To appreciate open road cars, you need well…. the open road. States like my home of Florida are great for cruising with the top down because of open highways and plenty of road to break in your new sports car. As far as the home, you want a property with a wide drive way and a spacious garage to house your favorite vehicle. I know this is a no brainer, but you will be surprised how many buyers purchase homes with a garage and driveway that doesn’t appropriately store their vehicle. A car just like a home is a reflection of your personality. You want to emphasize that as much as possible. There is nothing wrong with a little showing off.

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The phrase “the right time to buy” has been overused by agents the last few years due to plummeting home values. This phrase is more relevant today then ever has home prices continue to reach record lows. So if you were to ask me if it’s the right time to buy? I would say an absolute yes.  Home prices are at their lowest levels in recent memory, which makes it the right opportunity to purchase a property. The government has made attempts to stimulate the housing market through tax credits and other measures but have failed to stem the avalanche of distressed properties that have taken up a large portion of inventory across the country.  Prices will most likely continue to fall because distressed properties are depressing home prices. With a negative economic outlook on the horizon and rising unemployment, it is likely that more Americans will default on their mortgages due to a grim job market and stagnant wages. This will most likely lead to an incease in distressed home inventory. Now when I say it’s the right time to buy, I say it under certain conditions in that it’s the right time to buy if you can actually afford to purchase a property. Let’s not forget the Real Estate bubble was created because buyers received loans on properties they just could not afford. This hysteria could certainly happen again since nothing has been done to fix what caused the original crisis. If you’re buying a home, you want to purchase a home in cash if all possible. Home prices have dropped low enough where purchasing a home in cash is doable.  If you are going to use financing, use a fixed rate loan and leave a large enough down payment where you can pay off the loan in a few years. To get stuck with a 15 or 30 year mortgage in this market environment will leave you in bad financial position, especially if you have to sell your home in a few years.  It’s important to keep in mind that there are risks when purchasing a home. This market has been brutal to both buyers and sellers. However I also believe that even in dire times there is always opportunity. If you are not careful though, this opporunity can come with a heavy price.

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According to the Miami Herald, coastal properties in South Florida have been somewhat stable. The property sector that has maintained stability has been non-distressed properties. Distressed properties however have continued to play a significant factor in the decline in property values, especially in South Florida.  The coastal properties that were least affected were high end neighborhoods such as Miami Beach, Biscayne Bay, Coconut Grove, and others. Coastal properties naturally will maintain their value in a stagnant or declining Real Estate market. Luxury homes prices did not decline as sharply as homes in lower price ranges or in less affluent neighborhoods.  Buyers are gravitating towards regular listings because  they are less complicated or messy then a short sale. Short sales can normally take three to six months to close.  Buyers are preferring foreclosures over short sales since foreclosures can take only thirty to forty five days to close. But buyers have become wary of banks and how they are playing the Real Estate market due to the robo signing fiasco from last year.   Luxury homes are becoming one of the few segments of the Real Estate market that have maintained stability since the market collapse of a few years ago. Some of the factors that can get in its way are an influx distressed properties and another shock to the U.S. economy.

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The Real Estate market continues to struggle as home prices fall once again to record lows. The Real Estate market has been one of the hardest hit sectors of the U.S. economy. As of right now it seems like its business as usual with foreclosures and vacant homes ravaging the market.  Naturally most realtors would say this is the best time to buy because of  low prices. Perhaps it is, but only if you can actually afford to purchase a home.  If you have the cash and the ability to purchase property either for yourself or as an investment, then certainly it is the right time. If you don’t have the cash. It’s best to sit tight and build capital. If you do have the money, then time is of the essence when purchasing a home at a great price. The reason why time may not be on your side is due to inflation. Right now consumer goods such as food, oil, and other items are increasing in price as the dollar loses value. This means that your purchasing power will gradually diminish as inflation takes hold on the economy. What we may see in the not so distant future is a rise in home prices. Not because of a reduction in inventory or economic growth, but because of inflation and its effect on the economy. Gas, food, and other items are becoming more expensive by the day. This can eventually trickle down to home prices. So if your someone who is looking to purchase a property, then you may want to seriously think about your decision and make it within a reasonable amount of time. The longer you wait, the more your money loses value. Sadly these are the economic realities that we face. There is not way to sugar coat. However being smart and recognizing future reen

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The U.S. economy  continues to struggle as the value of the dollar falls and the national debt soars. Many Americans are debating if a home is still a good investment in the aftermath of the Real Estate market bubble.  This really all depends on several variables. For one is the location of the home you would like to purchase. If your in an area that has a large amount of distressed properties, then you may want to re-think getting locked into a 30 year mortgage. Also, it depends on how you purchase the property. Cash is king. The more cash the better.  The more you leverage yourself the less appealing of an investment your home has become.  If you don’t have enough cash. It’s better to rent and save then get yourself into too much debt.  With inflation a growing problem in the U.S, things that have real value are going to be the investment of choice for many Americans. I believe a homes value is not necessarily just it’s market value. It’s the joy and use you get out of the home that matters.  Homeowners only focus on what they can get for their home in the open market. It’s this obession  that has caused homeowners to spend an substantial amount of money on upgrades that won’t increase the price of the home to compensate for all the renovations they spent on the property. The property at this point becomes an liability rather then a asset. If you are going to upgrade the property. Do it for yourself, not for the purpose of trying to sell the home. You’ll save more money in the long run. As I’ve mentioned before, I believe a homes use is the real value on the property. If you measure your homes worth by that value, then you’ll get more use out of your home and enjoy it for years to come.

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