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The Craziness In The Real Estate Industry
by Laura Bell
TheSyndicatedNews columnist

Laura Bell's work has appeared in the San Francisco Examiner, the San Jose Mercury News, the Los Angeles Times, the Los Angeles Business Journal, the Orange County Business Journal, Small Business Opportunities and as well as many others.

The real estate industry is in flux and will be for quite some time. The latest are bailouts to various banking institutions. We are jumping back to the 80s. Some may not remember the savings and loan bailouts. It was a mess. The recession of the early 90s exploded shortly thereafter.

Things are hard for the buyers and sellers as well as brokers who relied on their sales talents for an ongoing income. Trouble happens. Agents and brokers are trying innovative techniques to cope. A short clip on the Los Angeles prime time news highlighted one such attempt. A new helicopter service is in LA. The market niche: take potential real estate investors on a complete area tour in an hour. The cost is $1k an hour. It seems that foreign investors are being lured to our real estate because of the weakness in the dollar. They see our real property as a good deal. (It takes two dollars to make a Euro.)

Additionally, someone trying to lease space in a large condo building in downtown Los Angeles has been playing images of dancing women to be seen in the windows while motorists drive by on the freeway.

There is also a radio commercial about a guy flipping houses. He convinces his buddy to try the same thing. I can guarantee you no one is successfully flipping houses in this market

There are still ads on the Net and the radio with “interest rates are down again.” My question to that is so? This applies to both foreign investors as well as those responding to such a lure. Getting in on a good deal is only beneficial with consumer goods. You don’t worry about whether or not you can afford to keep them once the cash register rings. The good buy/bargain theory doesn’t work for real estate.

The issue is what happens once you are in the house, whether for your family or as an investor. People buy real estate because they want the price to go up. They also want to be able to stay in the home with a mortgage they can afford.

If you are convinced you still want to invest in real estate during this time, commercial real estate and hi-end homes are still moving. Do your own research on any potential project involving real property. Depend on no one else during these turbulent times.

Agents are continuing to scramble. Zeroing in the tiny portions of the market they are still active is one option. If one is stuck with homes that are not moving, a leasing package for corporations that have a need for relocation or traveling employees .might be the answer.

Hold back on refinancing for now. Refinancing is not possible when property values go down. So, even if this has not happened to your property, it could after you refinance. The decreased value could wipe out your equity. In these situations, the only way you can get out from under, other than bankruptcy, is a quit-claim. Neither paints a pretty picture.

There will be a time coming where they will be a shift. It is known as pent-up-demand. This is the term for the market’s reaction to any slowdown. It doesn’t really matter what market. This will come when investors and individual buyers again feel confidence in the market. Keep your eyes out for shifts in figures for your region. This shift will come at different times in different regions. Then, there will really be good bargains.

More strangeness in the market is still to come. Be patient if you want to be one who makes a good deal.


Published: Jul 14,2008 13:35
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