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It’s hard to miss the many housing reports in the news. For Sale inventory is at incredible lows. Buyers are jumping back in the market and over bidding to get their house. Home prices are up big.  Economic news is positive. Mortgage rates are rising. This is like Déjà vu of the 1998 Foreclosure home market. If you could go back and buy every discounted foreclosure you could in 1998 – would you? And now that you have a second bite of the apple – will you jump in with both feet? I hope so. (Join me Tomorrow, Wednesday to learn how.) Don’t believe me? Read this for yourself…

After Foreclosure, Former Home Buyers Back in the Market

“Boomerang buyers” — former homeowners who have gone through a foreclosure, short sale or bankruptcy — are restoring their credit ratings, getting mortgage approval and hitting the streets in pursuit of home ownership in Minnesota and across the country. Already, one in 10 home buyers this year has gone through a foreclosure or short sale, more than double the rate in 2012, according to John Burns, a national research firm on the housing industry. Boomerang buyers are emerging at even greater numbers in communities hardest-hit by the housing collapse, including Phoenix, where one in five sales will involve a buyer who had to give up his home. Read more here. 

Home Prices Continue to Climb at Double-Digit Rates

Total existing-home sales are 15.2 percent higher than the 4.41 million-unit level in June 2012. Total existing-home sales.  The national median existing-home price for all housing types was $214,200 in June, up 13.5 percent from June 2012.  This marks 16 consecutive months of year-over-year price increases, which last occurred from February 2005 to May 2006. Lawrence Yun, NAR chief economist, said there is enough momentum in the market, even with higher interest rates.  “Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand.”  Read More here. 

Rising Rates are Great for Housing

We are happy to see rising mortgage rates because we believe a stable housing market is a better long-term goal than a booming and busting market, and the housing market has been booming! Here’s why;

• Appreciation rates: “We have a lot of home price appreciation going on, and if the Fed keeps rates where they are, we are going to see a lot more.”
• Investors are flipping homes again: “It is such an almost obvious bet at this point that everyone is piling in…We are seeing flippers now in the market…You only need to own the home for a couple of months to make a profit.”
• Tremendous Fed stimulus: “3.5-4% interest rates will cause rising home prices everywhere, and at some point…affordability is going to get out of whack, and that is when you want to get out.”
• No bubble…yet: “I don’t think we are in a housing bubble yet because prices are not out of line in relation to incomes, but I think it is time to start the conversation to make sure we don’t end up in another one.”
• More Here

As Positive as the News Is – Investors Still Face Challenges

It is getting more and more difficult to find deals. And when we do find a deal, oftentimes it is being bid up by every Tom, Dick and Harriet, well over asking price. Most likely these buyers are either long term investors seeking positive cash flow, or home buyers who want out of the rental market. If you are a “buy, fix and sell” flip investor – you cannot compete with these buyers. There prices will bury you every time.

Foreclosure Investors, You are Faced with a Dilemma. What do you do?

1. Compete with aggressive buyers for deals on the MLS and over pay for property (and lose money on your flip)? No, that’s crazy. Who would do that?
2. Retreat to another market area, thinking it’s “just your area” that is this competitive? Sorry to break the news to you – but you area is not an island – I’m hearing about inventory shortages all over the US (especially in the hardest hit markets).
3. Find motivated sellers that your competition is missing – such as homes not listed on the MLS? BINGO. Correct answer! Smart investors don’t follow the pack. They go where others are not. Smart investors put themselves in the right places to find the right deals – and pay the right prices!

You read right. Smart investors not only know where to look for the best deals, but they know how to price their deals properly – so the seller says yes AND they lock in a 15% profit for themselves at the same time. In this hot market, with prices rising rapidly, it is not easy to determine “after repaired value”  (ARV). And without the right ARV you cannot calculate your offer price. Everything rides on the determining the right ARV with the right repairs (and repair budget). You better get this skill perfected, or you will be in trouble!

Doing the “Math Right” Is Still Critical – Even in a Rising Market

You can’t afford to pay too much – and risk not finding money partners to fund your deals. (Money people are not stupid, they won’t over pay for property. You have to show them it’s a good deal at purchase or you’ll never hear back from them again.) And if you have your own money, there is no reason you risk losing it. Nor can you risk going to low in your offer price and risk not getting the deal. You want to invest right? You’ve got to get off first base then!

Join me Tomorrow, Wednesday in my Live Strategy Session to learn “Get Your Foreclosure Offers Accepted in a Hot Market“.

If you are not already registered, please do so here. We are very close to a full house already. And then make sure you login early and stay until the end. I’ll be reviewing 3 real flip deals – showing you exactly how to get deals priced right. And I will be taking live questions at the end, so stay for the full class. You don’t want to miss this one. Talk to you then..