BiggerPockets

Many of the bubble markets like Las Vegas still have a lot of REO properties that need to be disposed of. Until that happens you have a market that has way too much supply. The banks have been doing a steady release of these REOs in an effort to maintain some form of price stability, yet the median price is still falling. The increasing sales do show that the lower price is having an effect.

The silver lining in the Las Vegas market is that these lower prices are allowing some areas to show positive cash flow for the first time in more than a decade. I agree with you in that cash is king. Investing for appreciation is a fools game at this point. If you have good cash flow and buy to hold it doesn't matter if we are at the bottom or not.

I remember that meeting with Steve Bottfeld, he did an excellent presentation. He also had a great line (which I promptly stole) when he said " 70% of all statistics confuse 80% of the people 90% of the time."

Statistcs can be spun in so many ways as you can see in this article: http://www.biggerpockets.com/renewsblog/2009/02/23/spin-cycle-real-estate-statistics/

I can't wait to hear what that fantastic speaker at the Real Estate Insiders Club has to say in his economic update in April!

:cool:

Being that real estate is so local in nature I think the bottom will hit in some places before it hits in other places. Just as the prices rose so fast in Phoenix, Vegas, etc and rose slow in other parts of the country, I think the ultimate recovery will follow a similar signature.

Personally I hope that we continue to have these incredible bargains for a while longer. This is a once in a generation buying opportunity (at least in the Virginia market).

Jim

I am about to share the plan, that I am doing for me.

there are many things to watch in a bottoming market

when watching trends, watch YOY, not month on month. Short term trending is fun to watch, do not use it unless you are making short term moves.

I watch the following:

Money in Motion
number of sales
median sale
average sale
$ per SQFT

the bottom of most markets look like a valley, beware of the ditch, trench, gorge in the valley. The number of homes to sell to return balance to supply and demand determines the depth of that.

Watch the interaction of the median and average in relation to each other. That is the key. Is the median pushing or pulling the average? I wish I could post a picture here. I have a chart of Lehigh Acres Florida that could be a case study as to that thought.


as for investors. you will never time a bottom. When playing the bust/boom cycle game ( please note word placement) do not spend your treasure until you have positive leverage in the market. That is about the time the ditch forms in the valley, FYI

I like Jeff's key factors to look for as well as making your own charts from good data you collect, and not use someone elses work. (GIGO)

I would add that it is very important in my opinion to look at information and data regarding planned development, units scheduled to be built, units being built and if the new units are in-fill or not. These factors can paint a picture as to the strength/weakness in a specific market.

PS Jeff - How is the market these days in Lehigh Acres? I know of many who got taken in that market, those that went against my advice.

This is a once in a generation buying opportunity

I think you've got that backwards. Several years ago was the once in a generation buying opportunity provided you were smart enough to sell at the top of the market. Now the market is coming back to the norm, where it will stay for decades. This will not be a V-shaped recovery in housing prices. The recovery was the drop from the astronomical prices reached during the bubble. The coming "recovery" will look like the letter "L", prices will go down and stay there, where they should have been all the while (except for the normal rise due to inflation).

Mike

Does the recent spate of good economic data mean the recession's almost over? Not so fast, According to the Stock Research Portal: "Manufactured durable goods shipments (which contribute to GDP) fell 0.5% in February, and February new house sales in annualized units were still the second slowest annualized (after January) since 1963." (http://www.stockresearchportalblog.com)

I don't see how we could have hit the bottom yet with the back log of foreclosures and pre foreclosures waiting in the wings, but I can tell you that there has been a dramatic change in activity in my market.

Lots and lots of people are buying right now. I can't remember the last time I made an offer on an REO when there weren't multiple offers and it ended up going over list. It's crazy. Even pieces of junk have multiple offers.

The thing that has me scratching my head is that there has been a noticable decrease in the number of REOs coming on the market, while the number of lis pendens filed in my county has remained the same (roughly 2k/month).

I wonder where all of these properties are going?

Any thoughts?

The way the givernment is throwing money around, I can't say I blame them.

Usually, the verge of the ending storm is not always oblivious to the general public. No one knows when the bear market would end or not. It's up to you to be aware of your local market and see how you can blend in with the surrounding environment.

Anyway, my prediction is that we still have not found the bottom. We probably have but I'm pretty sure that the outcome for us is not going to be pretty. We could either have stagflation or hyperinflation coming up in the near future and that dire prediction will be even worse that I would have foreseen. The one who is already buying now will pump money into the system and give back the government their money.

There is a reason why interest rates is still low. They're trying to recapture the money that we've took from the government. So, my prediction is that we still have a long way to go when that debt is fully paid off. The times are acoming gentlemen, and it will not be pretty for the middle class and the rich.

The world economy is under attack, and sooner or later, North Korea will take advantage of our president fooling around with the defense spending. While China is consuming our money, and already we owe a substantial amount of money to them, we could face danger in the near future.

There was a quote in the Bible that I've just read, and I wanted to share it with you guys. Here it is: "He that soweth iniquity shall reap vanity; and the rod of his anger shall fail." King James Version Proverbs 22:8.

This quote strikingly recalls my memory, even though I'm 19, that we lived through the time of a huge economic boom. The housing market was increasing its rate and during the course of that progress, many people took advantage of the get-rich schemes. Such as no money down deals or 100% financing with no credits!!! The interest rate was even low back then.

When banks don't require a collateral for a loan, they risk their lives on these people who are making free money on these houses. The course following the minor depression, banks were shut down because they lost so much money from these people who could not offer a 20% downpayment.

It was not just George W. Bush, Congress, Democrats, Republicans, and the Feds who we feel we need to put the blame on; it was also us who were the enemy of the state. So, when you said that we never take any money from the government, that's actually correct; but, you have to keep in mind that we stole money from the banks and the government is going to punish us for the sake of these events that we have caused.

There are some more quotes in the Bible that I thought were interesting. Such as this famous quote, "The Lord giveth, and the Lord taketh away." Quite interesting if you would apply my perspective of the economy into it.