photo credit: techfun

Foreclosures have been going on at a record pace & it appears they will continue for a while.  But banks have been smart enough to not put all of their inventory on the market at once.  They would crash the market and further erode the value of the real estate they own.  These houses that have been recently foreclosed or are soon to be foreclosed on are called “shadow inventory”.

According to research by the National Association of Realtors, there are 2.4 million properties in this shadow inventory.  But this number could be even higher.  It doesn’t include homes in which owners are trying to do a mortgage modification or a short sale.

It’s safe to say that the market is going to be facing foreclosures for a while longer.  No one knows how long for sure, but it will remain a buyer’s market for the foreseeable future.

FHA announced it is temporarily lifting this restriction–with some qualification–in order to allow buyers to more easily purchase homes being sold as a result of foreclosure.  This is a good move on the part of FHA.  It is good news for the real estate market in general.  From what I’m hearing, we are likely to be seeing foreclosures continue to flood the market.

Doing away with the 90-day requirement will help the coming trend that shows the foreclosure problem is beginning to move up market as well.  As more “middle class” owners face layoffs and unemployment, higher priced homes are coming on the market as foreclosures.  For an investor, the higher value in a house the greater the risk of loss and the more need he has to fix it and sell it quickly.  These new guidelines will allow investors to fix and flip these higher value homes.

There are some restrictions aimed to limit the predators while allowing legitimate investors to show how they increased the value of a property and justify their profit.  This new p0licy will likely not get the media attention the tax credit received, but I believe it may prove to be as effective at helping the market absorb the continued flood of foreclosures.

Click HERE for the full report on the HUD website.

Specific details of this temporary policy are available on the HUD website.

photo credit: woodleywonderworks

A recent article on Bloomberg.com reports that “the wealthy” of the world are moving more of their money into real estate.  They see the United States market as a good value.  (Click here for full article.) The prognosticators say that the US real estate market likely hit bottom earlier this year.  Although we will continue to see foreclosures coming on the market, we are likely to see demand increase as well.

I’ve been watching this market.  I know that opportunity is knocking right now for the average investor as well as the super-rich.  A few years ago everyone was trying to be a real estate investor.  Good deals were elusive &  competition was fierce.  I made the mistake of buying too high and rehabbing too much.  That mistake took me out of the game for a while.  But it’s now time to get back in.

The deals are out there.  I’ve learned some hard lessons about investing.  But I learn well and I learn quickly.  I’ll be looking to connect with other real estate investors too.  I’m sure I’ll find more good deals than I can take on my own.

But a recent story from KMOX news tells of a St. Louis man sentenced to nine years for just this kind of mortgage fraud.  Read the full story by clicking HERE. The losses to the lenders and investors ran into the millions of dollars.

No one is immune from rip-off artists.  But we can look at such stories as reminders to be careful in choosing who we do business with.  Get a referral.  Or at least get references.  Do your own due diligence.  And when you’re in a major financial transaction get an experienced professional to work with you.  Don’t rely just on the other guy’s good will.  He could be conning you.

For years, the cost of building materials in US have been impacted by China’s economic growth.  Now they’re doing real economic stimulus–pumping in $585 billion in the next 2 years.  And their projects are truly “shovel ready”.  China will boost its steel production by 10% to 12%.  This means that existing orders for steel and concrete will expand.  By 2020 China’s high-speed rail system will have consumed about 117 million tons of concrete.

So how does infrastructure growth  in China affect you and me here in the center of the US?

Market analysts predict that we will see a housing shortage in as little as 2 years.  They are calling it the Echo Boom.  With an increase in demand for starter homes, new construction will likely get some new life.  This is a good thing.

But with China continuing to suck up raw materials we will likely see increasing costs for new construction.  I think that these trends will be good for existing home sales and the overall health of the real estate market.

Real estate investor, David Lindahl says, “It’s always a good time to buy real estate.”  But you have to know your strategy for it to become a good buy.  If the forcasts are correct, now is a good time to pick up a house at bargain prices and reap good appreciation in coming years.