BiggerPockets

Do you feel that we have hit market bottom?

Since this might vary from location to location, how do you feel about the market bottom where you are either already invested, or looking to invest in?

No, we're not at the bottom. In fact, I think we've still got a LONG way to go. What we have now is a slight improvement in the stock market (a bear market rally), just like we had during the great depression. In the great depression, that was followed by the bottom dropping out and that's exactly what I expect this time. Bear market rallies with the temporary increase in bear market sentiment occur in all bear markets.

This issue here is VERY simple. We got into this problem because the American government and American people have been overborrowing and overspending for DECADES. The government's solution to this problem is to borrow even more and spend even more! Sure, that HUGE amount of funny money they have pumped into the market is causing a temporary slight rise in the stock market, but don't think for a minute that's going to fix the economy. All that fake money (created out of thin air) is going to DESTROY the economy and real estate along with it.

Mike

The fact that real estate has farther to fall has nothing to do with the profitability of my business. In fact, the rental business hasn't been this good for at least the past 6 years. I am COMPLETELY full right now and rents are going up. Even if the prices of property go down, it doesn't affect the cash flow!

Mike

Recently, there was data indicating that home sales, especially in pre-owned homes, shot up 5% or something. New constructions are still down. The purchases in pre-owned homes is largely due to investors picking up foreclosures that are good deals. It is very difficult to say, objectively, what is the bottom or what does it constitute? Many investors here are looking to buy their way to the bottom, if the numbers of the property work out.

Also, I guess... I don't have any idea of what I should be looking at to predict the market, though it looks like the gobbling up of foreclosures is the movement towards the equilibrium, and inflows into the system, clearing up a lot of the bad debt. But if you're looking for a deal, I think its really been the time to look for the last few months.

I agree with Mark, you don't have to time the bottom, just make sure that the deal works today. Having said that, I would stick to stable neighborhoods with a good mix of long term owners. This hopefully insures that will not have a lot of close by vacant properties to compete with you when you have to lease yours. Steer clear of new track developments where everyone bought their house at the same time, you could end up with every other house on the market and these neighborhoods will take a longer time to stabilize.

For some statistical perspective on the "Great Recession" vs. the "Great Depression" CNN did a side by side comparison:

http://money.cnn.com/news/storysupplement/economy/recession_depression/

While the statistical facts on the numbers may be correct, I don't think that those numbers are an accurate comparison of what our market conditions are today compared to the depression and would therefore agree with Mike's short answer.

Every city has it's own DNA and some cities will have a flat line while others will continue to drop.

I agree wit Taz in his assessment and would add that anyone thinking that RE recovery equals a steep incline in pricing is sadly mistaken. The market has already proven that obscene pricing can not be sustained unless income ratios increase accordingly.

Not only that, it will be a long time, if ever, that the mortgage industry and Wall Street will get away with the raping and pilaging they accomplished in 2004-2007.

kudos to you mike. while i don't think we have necessarily bottomed yet you cant wait for that. prices are at levels that you can make money and that's what you must do.
lazy people wait for bottoms in a market like this.
my prediction:people that invest now in this market and hustle through the tough times a little, will be the ones that look back at what a perfect market this was.

jeff.

Real estate is very much a local phenomena. In the area of western NY where I invest it never had the large upswing and it still continues to grow at 4-5% a year. We have had no drop in prices at all.

I found this graph which shows nationally how much real estate prices ran up during the past decade. It points to the potential for large drops to still occur in many areas

http://extremeperspective.blogspot.com/2008/11/how-much-will-housing-prices-fall.html