IT'S TIME TO BUY! Miami Herald article

Las Vegas, Nevada, USA National Association of Realtors Forum

According to an expert economist presented by the National Association of Realtors in Las Vegas, the tough real estate market of 2007 that came out of the sub-prime melt down and speculator’s greed, not to mention buyers fears, may be nearing its end.

With the stock market giving some investors a wild ride and our economy showing positive numbers across most industries, the real estate market is starting to look up brighter than in 2007. Median home prices increased 133% from $159,600 to $371,000 in the last 5 years regardless of the fact that the upswing stopped and went south back in 2005.

In the past 10 years, median prices increased 88% nationally while in South Florida the increase was a huge 230%! So why is every one so flustered by losing 10-20% of their inflated prices? The years 2003 to 2005 saw a market demand fueled by a large number of foreigner families moving into South Florida and not enough housing inventory. Then the speculators jumped in hoping to cash in on the craze and make a killing buying at any price on the assumption there would be some one else stupid enough who would pay them even a higher amount for the property. The desperation of buyers and speculators to pay any amount for a home drove prices to an unsustainable level and the bubble had to burst wide open.

Buyers now have the option of finding more available homes for sale at prices that are more accessible than before and with loans offering record low interest rates. Our inventories are beginning to drop which reflects the market is about to turn healthy once again. Of course, no one expects that the wild days of 2003-2005, when prices rose thousands in a single week, will return for some time to come.

The tax amendment in January 2008 which will give some type of relief to home owners, the reduction by many insurance companies of their hazard insurance premium, and the new legislation which will allow FHA loan limits to increase are all factors that point to an imminent recovery of the real estate market at large.

Once the news media begins to pass on the fact that this is the best time to purchase a home (never mind the amount of available inventory), buyers waiting by the sidelines will realize the train is about to leave the station again and they want to be on it. The sub-prime market made up only 10% of mortgage loans but accounted for 40% of the current foreclosures. By the most part these were loans placed on small homes or condos for first time buyers… and, of course, to speculators who got burned real bad this time around.

Other mortgage sectors are stabilizing as well. Some 80 million baby boomers are set to retire over the next 10 years in South Florida Builders stopped building and new permits are at an all time low. This means no new homes being built and the supply of existing units eventually going down even further to fill in the increasing demand. One thing is for sure. Once the feds see that the real estate market has safely stabilized interest rates will definitely start to go back up again at faster increments than when they decreased it.

Banks, on the other hand can’t wait to see their bottom line get fatter again so higher interest for the near future are a sure bet. For this reason and the fact that the home affordability index is now where it should be, buyers are starting to approach the market to buy the home that just two years ago was but a dream.

MOST REAL ESTATE MILLIONAIRES ARE MADE WHEN THE MARKET HAS DROPPED THAN WHEN IT IS AT THE PEAK. FOR OBVIOUS REASONS YOU WANT TO BUY LOW AND SELL HIGH... BUT WHAT IS LOW??

Buying high when every one and their cat is purchasing real estate to re-sell to some one else at a huge profit is the sign that greed has enter the market and common sense has left the room! Greed is further fueled by the media and cocktail party conversation of people making a killing in real estate.

On the other hand, when no one is buying and the media says the ''sky is falling" what most people ignore is that the savvy investors who got out at the peak are now scouting the market for property to hold until the next cycle is here.

You won't have a chance in real estate if you always follow what the media say s... they lag behind and exaggerate everything for the sake of 'tabloid' news. It may be true that real estate values have declined in many cities of the U.S. but it is also true that now many buyers can buy the home they dreamed about and couldn't purchase just a couple of years ago. By the same logic as people paid exorbitant prices in certain neighborhoods, values will return with a vengeance to these same areas most desirable in buyer's minds. All you need to do is go back in time to the real estate crash of the 1990s in California, New York, Houston, etc., and you can see that home values after their recovery showed an average of 300% increase in the same cities. Why was that?.. because during the down years and depressed market the demand grew back up and builders were out of the market creating a shortage of housing.

Florida is a state where building is restricted to certain corridors of land, however, most of that available land has been built up already. With most economic forecasts predicting big numbers of people still moving to the state in the next 10 years the stage is ready for a shortage of housing in just a few years.

A smart investor knows the signs like a hunter knows his pray. Cities like Miami, Los Angeles, New York have real estate cycles every so many years that offer the opportunity for profit. A well known real estate magnate who was basically bankrupt some time back has made millions in down markets across the United States and he still continues to build in South Florida. The problem is, as it has always been, that most people are like cattle.. the follow the others over a cliff 99% of the time and then wonder what happened to them. Only a few see the glass half full instead of half empty and even a lesser number of people escape 'greed' when a market is in a bubble as it was the case in 2005.