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If you haven't checked out the Wealth Intelligence Academy® blog, we invite you to do so. Here's just a sampling of what you'll find:
The Deflating Bubble
Let's say that you looked at your local market and you've determined that your market is indeed in a bubble. "So what?" you ask. What you need to recognize is that this bubble isn't the source of great concern, the market correction or pullback that follows this euphoric housing bubble is. So if prices where you live have recently increased rapidly and are now starting to fall quickly and the talk among realtors and investors has shifted from a seller's market to a buyer's market, the bubble is deflating.
How do you react to the deflating bubble? Experienced real estate investors and industry gurus recognize that the real estate market moves in cycles and prepare for them accordingly. In the March & April 2006 edition of the AARP magazine, economist Richard Dekaser provides a sample list of overvalued and undervalued markets. At the high end of overvalued markets was Naples, Florida at 84%.
When the market pulls back in Naples, Florida, there will be opportunity for some and tragedy for others. Think about it. If the market has increased rapidly and then starts falling quickly, there will be those that bought at the high side of the market and end up with what Wikipedia calls negative equity. Some of those will ultimately also end up in foreclosure. Because educated investors know the real estate cycles, they will be ready to start implementing foreclosure strategies as soon as the bubble begins to deflate. Will you be ready?
Overvalued Markets: What Can We Expect Next?
As I've mentioned in previous posts, some housing markets like Naples, Florida; Medford, Oregon; and Atlantic City, New Jersey are currently overvalued and poised for a correction. Of all the overvalued markets nationwide, California and Florida have had the largest number of local markets with soaring prices resulting in overvalued properties. However, many other states have also experienced large increases and overvaluation.
Even in states where home sales may have been flat or undervalued in 2001, prices have soared. For example, in Wilmington, North Carolina prices have gone from the $120s to over $200,000. Portland, Maine had an average price of $143,500 in 2001, and at the end of 2005, it was $217,000.
There are markets that have remained flat like those found in Ohio. In Texas, some markets are even undervalued. There are also undervalued markets found in the Midwest, including markets in Michigan and Minnesota. However, these undervalued markets are not to the extreme like the overvalued markets.
According to CNNMoney.com, "Naples went from 72 percent to 76 percent overvalued" by the end of 2005. The lowest undervalued market in this article is El Paso, Texas, which is undervalued at 25%. Thus, the markets that are undervalued are undervalued by a slight percentage as compared to the extreme percentages seen in the overvalued markets.
What does all this data tell us? That most of the country has experienced rapidly increasing prices during the past five years. So what can we expect next?
In the overvalued markets, we can expect a real estate slowdown of sales combined with reduced prices. In markets that are flat, the prices may remain steady, but a slowdown in sales will still occur. In the undervalued markets, the prices may level off and even increase slightly in some markets, but the slowdown of sales experienced in the other markets will also occur.
Regardless of the market you are in, get ready to start looking for bargains. The overvalued properties will fall back in line with value-prices and many will reach that bargain price level. The flat and undervalued markets may already be bargain priced and ready for the foreclosure fallout. Increasing foreclosures in all these markets will produce an abundant supply of bargains for the educated investor to find.
Educational Opportunities in Real Estate
Previous articles have acknowledged that foreclosure investing takes knowledge and perseverance. There is never a bad time to invest in real estate if you know the strategies and which ones to apply to certain market situations such as foreclosures.
In the world of real estate investing, there are many top-notch educational opportunities. The best offer hands-on training based on in-the-field situations where you walk through some of the steps to practice the techniques. For example, if you are in a foreclosure training class, you may actually go to a county clerk's office to observe a sale. Or, you may inspect a house in foreclosure and prepare a cost analysis.
There are also thousands of at-home training products including audio, books, DVDs, games, online classes, telecommunications, and workbooks available. These methods alone, however, don't offer the mentoring and coaching a new investor needs to take that step from knowing to doing. Since self-help is often a difficult road to take, personal advisors can make a big difference in becoming a successful investor.
In recent years, real estate investing has even become recognized in the world of academia. There are now accredited college courses about the subject of real estate investing; and, you can even get a college degree in real estate. The downside to the collegiate education, however, is that learning is limited to the classroom setting and to the books used in the classes.
With all these choices, how do you decide? You examine the education and training available and then answer these questions. Which method gives you the best chance for success? Do you want to be taught by professors who learned real estate investing from books? Or, do you want to be taught by successful investors who live investing, made past mistakes and are willing to share them with you, and have the passion for real estate investing that you do? Do you want the personalized approach of hands-on training and support for your new business? Once you answer these questions, you'll know that hands-on training gives you the best chance for success.
Remember, learning the proven strategies and techniques of successful real estate investors is crucial to your success. This means that education is the first key to unlocking your potential to a successful real estate investing career.
For more great investing information and commentary on current hot topics, visit www.educateblog.com.
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