When will the Real Estate Market Turn?

Everyone is wondering when the real estate state market will get back to normal? I am often asked that very question and I also ask it myself.



There area a few variables to watch.



Have prices of homes bottomed out? I think in most markets they have. I know in the Cleveland market the prices have stayed consistent for a few years now. That probably means that the market in the Cleveland Area has stabilized (wholesale prices). So before buying watch the whole prices of the real estate your thinking of buying.



Unemployment will also be a great factor. I'm not talking nationally or small to medium sized city. The bigger cities is what you want to watch Cleveland, Phoenix. New York, Chicago Etc etc. They will have the biggest swing upward when the market turns. I know in the Cleveland area we are have an employment rate around 8%. Make sure the city your considering is under the national unemployment average.



Cost of living is another factor. What does it cost people to live in the area you are looking at. Cost of living in the Ohio area is very low. You can live in a nice home in a great area for $70,000-$150,000. The area will dictate where you spend the most.



The cost of living becomes a greater figure as unemployment goes up. For example I talk to a lot of people in the Phoenix area and they know people that have their boxes packed waiting for foreclosure. Very sad, but when your going to invest know the area and the employment will sustain the cost of living.



The last thing and I think the most important thing is Lending. The access to money will need to be loosened up for this market to turn. I not saying it needs to go back to the foolishness that they did in the big boom. The lenders will need to have 5%-20% down loans and lower the amount on mortgage for lower mortgage amounts. For example $40,000-$50,000 mortgages are hard to get. Banks have not done that yet.



A great way to get a watch the lending is to go to your local bank and ask them about the market and is it changing? I went as far as asking a small business man that I noticed changed his fast food restaurants name. It was a fast food place that I regularly frequent for coffee. I ask the owner why the name change? He informed me that even though he had excellent credit the bank would not give him any of the money he needed.



The upswing on a down market is the buys are great and the cash flow should be at least 18% or better. In my market that is the case and investors are patient with that kind of cash flow. When the market turns and it will you can decide to hold or sale. Brett Young www.Rooftopinvestment.com