Market Shift for 2013-Separating the Hype from the Truth

by | Dec 21, 2012 | Uncategorized | 1 comment

When I first started investing in Real Estate in 2009, the word in Austin was there would be a housing shortage in 2013.  As unbelievable as it seemed at the time, it looks like that prediction came true.  Much like in California and other hot areas, Austin has a housing shortage.  Rents are rising as well as housing prices.  Multiple offers exist and there are no foreclosures.  Will that always be true?

This much is true:
  1. Foreclosures are harder to find
  2. Interest rates are lower then ever
  3. Conventional Loans are still very difficult to get
For those that qualify, this is the best time to buy real estate, whether it be a rental investment or their first home.  For those of us that don’t qualify, this is still the best time to buy real estate as a rental investment.  The challenge gets back to finding the funds.
It is often said to watch California for our future trends.  That said, this is what is happening in California:
  1. Inventory is low
  2. Prices are rising
  3. Multiple offers exist
  4. Hard to find houses with good profit spreads
  5. Lot’s of private funding/hard money lenders available
You can easily get non-conventional loans at a somewhat reasonable rates in California, but you can’t get a deal.  So what does that mean for the rest of us for the coming year?
In a free enterprise, there is a balance between supply and demand.  For real estate investors, the demand his high for funding, and the supply is low.  I suspect we will see more opportunities for “non-conventional” funding.  Look at California.  You can find private funding for as little as 7% secured by real estate in California.  Eventually, private individuals and hedge funds will look to other areas, where their funds are in higher demand.
Currently, hard money lenders and private investors love to lend their money out at 15% in places like Chicago and Atlanta, and we investors are glad to pay it because of the real estate rehabbing opportunities in those areas.  I believe we will see more non-conventional funding options in 2013.  More with money will recognize the demand and will diversify outside of this “California only” mindset.
What are your plans for 2013?
New blogs at http://jeannorton.com/blog2

1 Comment