With a high percentage of buyers being investors (reportedly as many as 1 in 4) in the Twin Cities and with the strength of the stock market, a large percentage of available home purchasing power was invested in the stock market. I suggested at that time that we would see a recovery in the real estate sector when we saw a decline in the stock market. Why? Simply because savvy investors are constantly rotating their money into the market where they can realize the highest rate of return - the old buy low - sell high strategy.
Time to Buy? You Bet!
Having said that, what are we facing today? Well, the stock market has been high for some time and showing signs of faltering. The real estate market is low, real estate loan interest rates are incredibly low and inventories of available properties are high. This is a perfect storm for real estate investment, whether for personal or pure investment purposes. Is anyone paying attention? Yes, indeed. Showing rates of existing properties are on the rise. Savvy investors are returning from the faltering stock market and buying multiple properties in blocks.
What Next?
Well, savvy investors almost always win. Their re-entry into the real estate market will reduce the supply of properties, causing the inevitable rise in prices - good for sellers, bad for foot-dragging buyers. Is there a pent-up demand for housing? Probably. It is said that there is one home purchased for every two jobs that are created. There have been 5.4 million jobs created over the past few years, so we could anticipate a tidal wave of buying when everyone takes notice. My advice is that if you are a buyer in 2008, do not wait for rising prices to jump in - the time is now.
