The real estate bubble burst, but that does not mean there is nothing left in real estate to make money with. In fact many real estate investors are making more money now than they did when the bubble was still getting bigger.
Savvy Real Estate Investors Find Opportunity in Post Bubble Market
By Philip Elmes
Bubble, what bubble? After over a year of speculation and dire predictions, the “bubble” analysts and the media talked about arrived and, in most markets, has passed. East and west coast markets, Florida and elsewhere, indeed stalled and prices “adjusted” downward. In some markets prices have declined by 30% or more, a roll-back in pricing to 2002 and 2003 levels. Most experts suggest this “deflation” of prices is a healthy easing of a speculative push in home prices not related to traditional housing demand prices – speculators gaming the system.
Midwestern markets–notably including metropolitan Chicago and Milwaukee–were only lightly affected by this speculation, particularly in low and moderate income neighborhoods. While gentrifying neighborhoods will experience rising median prices, middling neighborhoods continue to appreciate at more historically validated annualized 3-4% rates. True (long term) Investors rely on little more.
The passing of the bubble marketplace psychology did affect the wholesale market in distressed housing of particular interest to savvy investors. A happy response to the popular belief that the “bubble” has burst, is the departure of those playing the speculation game in the distressed housing market. Those of us in for the long haul got our marketplace back.
And for many that marketplace of choice is Affordable Housing, housing where the cost of ownership (or housing, in general) falls within the 30-35% of household income recommended for generations to those seeking household budgeting advice. In communities across America the loss of affordable housing due to rapidly increasing property values constitutes a serious community development problem. Real estate investors and developers who are willing and able to address this problem as an opportunity will prosper.
Savvy investors understand that when it comes to Affordable Housing, the market never goes away. That market is less “interest rate sensitive” and the demand is always there. Working class families and first time home buyers will always seek out decent housing they can afford regardless of media hype focused on trendy speculation. Investors and rehabbers attending to these practical, fundamental housing needs will find a ready market.
Phil Elmes has been a real estate developer and broker since 1973. Beginning in early 2000, Elmes has conducted a real estate training and coaching program, The Urban Rehabber Program, based in Chicago. The program features monthly networking sessions, a Seminar and Workshop series, and a Membership Program featuring added benefits. It is conservatively estimated that Urban Rehabber Program participants have completed well over 1500 homes since the program’s inception. A free e-newsletter is available via the http://www.UrbanRehabber.com web site.
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