Smart individuals know that the time to invest ( and NOT speculate) is when prices are at low tide or at the bottom of any given market. Much like a chess game you need to know when to make your next move!
Ascertaining the "bottom," of the real estate market is not quite a scientific exercise but it does require sound real estate investment know-how, or education plus capital or access to capital.
Thy key is to understand the differential between "prices" and "value."
Too many speculators in recent years simply over-paid for much
investment real estate. thinking they could in time sell ( or flip) for a profit.
As a result the present real estate investment market is still over-heated with prices of property being excessive for a good to even a reasonable rate of return (ROR)on investment!
I'm of the opinion that the signs are clear: investment property prices will begin to dip and drop as retail and office vacentcy rates increase; when the high cost of heating & cooling hits the bottom line; when banks and financial institutions scrutinize their portfolio loans for property value ratio's.
We are now seeing auctions of some distressed strip-centers.
We are now reading about the problems many regional banks are facing with their stock value. ( Some Bank stock has dropped as much s 84% accoring to the NYT).
We know that many retailers, big and small, will vanish within the next six to twelve months. ( Wilson Leather has closed 200 stores; Sun Glass Hut has shuttered; and GAP has announced it is "reducing" floor area in all of it's stores! Talbot's is seeking a cash infusion.
We have begun to see what, I believe, is the beginning of consolidation in the fast food business which the sale of Wendy's. Many former auto dealerships, in great locations, are vacant and closed.
The NYT reported on 6/17/08 that the overall number of auto dealerships nationwide declined from high of 30,000 to about 26,000 for a loss of 4,000 or about 80 per state.
The big bluff is almost over and those in-experienced late night TV infomercial inspired speculators, who confused the stock market with the real estate market, may be the first to fall. Amateur hour by the real estate speculators is almost over.
We are still headed for the bottom!
Now is the time to build "cash resertves" and to be prepared for the comming investment real estater opportunties
It now not so much a question of "if" the market falls & hits bottom now is the reality of "when."
Bill McInerney
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