House Prices Fall The Most Since 2009
Bloomberg’s headlines recently announced that house prices just fell the most since 2009. Is that possible? If so, what do you do as a real estate investor?
Have House Prices Really Fallen That Much Already?
In contrast to Bloomberg’s report, Zillow data shows that while even hot markets have seen average home values falling a few thousand dollars month over month, they are still up by double digits from last year. Though there are many individual motivated sellers, companies, and banks accepting deep discounts from cash buyers.
If you lived or invested through real estate in the 2008 Great Recession, then you know that house prices can and did go down much, much more. They are likely to again.
How Far Can Prices Go Down?
If you owned property between 2006 and 2010, or know anyone who did, there is a good chance that property fell by as much as 50% to 70% in value during that time.
There are some exceptions. Slow growing, Midwest markets, and where home equity loans were limited to 80% LTV, like in Texas, may have suffered less severe drops.
Still, given that many buyers have recently been overpaying for properties by as much as 50% over top retail asking prices, this next dip could be even deeper than the last.
Real Estate Is Still The Best Way To Make Your Money
Those that are just now experiencing a rotation in the economy and real estate cycle for the first time may find this very scary.
It doesn’t last forever. Prices will rebound and surpass recent highs. At least according to what we’ve seen throughout history up until now.
However, if you didn’t plan for it, and don’t know how to navigate this part of the market, it can be shocking.
Fortunately, this is actually one of the best times to invest and make money in real estate!
There is a lot less competition, you can demand much better value deals, and terms.
How To Make, Not Lose Money In A Declining Market
There are several keys to winning in this market. One is making sure that your offers are low enough to be in and out, and make a profit, before the market catches up to you.
The next is to stick to wholesaling real estate. This means either flipping the contract without even buying the property yourself. Or buying and immediately reselling to an end buyer within 1-3 days.
You can lower your risk, and dramatically boost your cash on cash returns even further by leveraging and using transactional funding to finance 100% of your purchase price.
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