Just had on talk radio and the doom and gloomers are out in force.
There are few good words to be heard. Market hysteria fueled by greed enabled by banks and Washington legislation drove prices to unsustainable heights.
Now, get ready for the reverse hysteria. Today’s host was predicting the end of the American Dream. “The end is here. You can’t buy a house. You can’t move up because you can’t sell your house. The dream has died. Real estate is over.”
Of course, the host’s comments were followed by call after call from people who are trapped in homes they can’t sell and poor young souls who will never be able to buy. “The end is here. The end is here.”
Watch the crowd. Profit as the contraian.
Here is the truth.
In every country, since the dawn of time, it is the rich people who own the real estate.
Here is the truth.
This will not change.
Prices will drop to levels where buyers and investors will want into the market. Real estate agents who helped push home prices up will now help push housing prices down.
For many reasons, some people will want to or will have to sell. They will ask their real estate agents what to do and the agents will say drop the price. The three-bedroom, two bath house that once sold for $400,000 will now sell for $280,000. It was worth $400,000. It is now worth $280,000. This will become the benchmark price for future sales.
This “finding the bottom” will take another two years or three years. However, before the new benchmark is established, more than a few sellers will actually believe doomsday predictions that their homes are headed toward being worth almost nothing. Of course, this will be far from the truth. Our benchmark example is worth $280,000 and $280,000 is still a lot of money.
In panic, more than a few former $400,000 houses will sell in the low $200,000 on their way to finding that stable benchmark at $280,000. In this process, active investors will buy low and profit.
We are discussing the realities of the real estate business. This is not about feeling sorry for all those people who thought their homes were worth $400,000 only to find that they are now worth $280,000. If at all possible, they should hang tight.
Now, what if you had bought those six properties, would you be out $120,000 X 6 = $720,000?
I certainly hope not.
Real estate investing should be a long term endeavor of creating a family estate. It is not a reality show flipping game to be played by amateurs.
If you bought those six properties and followed the Master Real Estate Course, you bought exceptional properties at very good prices. You are in for the long haul. Yes, your values may be down but probably not as far down as average. You have exceptional properties and not average properties. All real estate prices will rebound . Inflation will be back and real estate is the best hedge against inflation. Real estate prices will go back up because people feel good when real estate prices go up and politicians like people to feel good. In a few short years, your benchmark will be back to $400,000.
Also remember that population is always increasing thus creating a constant need for additional housing. And, funny but not funny, lots of moms and dads are going to get sick of junior living in the basement or garage and will spend any amount to get them housed elsewhere.
As a long term real estate investor, you will be collecting rents and paying down your debt. In less than twenty years, you will own the properties free and clear of debt and you will still be collecting rents. Then your children will be collecting rents. Then, your grandchildren will be collecting rents. Then …
If you like this post, you will like the Master Real Estate Course.