I'm not going to express my views about the insanity in Washington regarding the financial market and Detroit's Big Three bailouts. I will say the new President sure has inherited a mess (some would say it's a crime scene). His hands are full but I think he's got the moral support of the general population and I wish him (and all of us) the best. On the bright side, if history teaches us anything it's that this, too, shall pass. Everything changes, nothing is static. If you don't like what you're seeing right now, just wait a minute, it'll change.
I've been telling anybody that'll listen that it's time to buy real estate. Great deals are made when the market is in the tank and everyone is trying to sell. In the residential market, the number of home sales is increasing but prices are still flat or falling, although at a much slower pace. This is a sign that we're at or close to the bottom of the current real estate market cycle. Another sign of a market bottom is to look at who's buying houses these days, and who are the sellers. In housing it's mostly investors buying property directly from the banks.
I've been getting lots of calls lately from Realtors who know of commercial properties with owners that are in big trouble and need to sell. It's definitely a buyer's market and cash is king. We're always looking for more great deals as we raise capital to make it happen. The market will probably slide along the bottom for all of next year before signs of life become evident, if then. However, until there is liquidity in the lending market, nothing will change. Since banks and other commercial lenders are not making loans these days, owners have become much more willing to hold a mortgage on their property and you can get great terms from a motivated seller.
The bottom line is, there's lots of blood in the streets, with more to come, but the darkest hour is just before dawn. Sure, the market may languish for a while but when the recession ends and liquidity is restored to the financial markets, real estate prices will begin moving up again. And don't forget, we'll be seeing massive inflation in the next year or so. You can't print dollars like the Fed has in the last couple of months (and will continue to in it's battle to restore liquidity and end the recession) without increasing inflation. When inflation is on the rise, you'll want to be in assets that move with inflation, like real estate. Buy at today's super low prices and watch your wealth grow as inflation does its thing.
Take a look at the market cycle chart in my blog www.dougmitchell123.blogspot.com to get an idea of where we are in the current real estate cycle and where the market will head as the economy recovers. The cycles usually repeat about every six to ten years, but because of the extent of the mess the economy is in right now, and Congress being clueless about what to do, I think this one will be long in duration. Remember, the time to buy anything is when everyone else selling, whether it's real estate, stocks, cars, whatever. Those who move against the crowd now will be tomorrow's millionaires. It happens in every recession and it's happening again now. You can bet on it.
According to the most recent Consumer Barometer from Lloyds TSB Corporate Markets, Britons could be becoming more optimistic that the Bank of England's monetary policy committee (MPC) will not increase the base rate once more before the end of the year. Some 69 per cent of those surveyed believed that interest rates will be higher rather than lower within a year's time - a figure down from the 74 per cent noted in July and the lowest noted for the last six months. In addition, the financial services firm suggested that the public's views about interest rates are "likely to have been boosted" after it was revealed that consumer price index inflation fell below the Bank's target during July to 1.9 per cent.
Trevor Williams, chief economist for Lloyds TSB Corporate Markets, said: "The recent financial market volatility, coupled with July's encouraging inflation figures, has prompted economists to reign in their interest rate expectations and it seems like consumers have followed suit. For the first time in six months we've seen a positive sign in consumer opinion that interest rates may finally have reached their peak in the current cycle."
However, he suggested that consumers are yet to feel the true effect of the MPC's increases over the last 12 months on their ability to manage their personal finances. "This change in sentiment, coupled with the boost from improved job security, suggests that the coming economic slowdown will be one that steers clear of recession, despite the fact that the full impact of the five interest rate rises so far has not yet been felt," Mr Williams commented.
Consequently, the confidence in interest rates, combined with the news of a rise in economic growth during the second quarter of 2007, was said to have helped increase the public's confidence in their employment security. The number of those respondents who are feeling more safe about their occupation was revealed to be the same as those who are currently feeling less secure, in comparison with the four per cent difference noted in June and July. Meanwhile, more than half of respondents felt that their job is currently just as secure as it was 12 months ago. However, the study also revealed a fall in job prospects. Currently 15 per cent believe that the British employment scenario will be better in the forthcoming year, compared to 36 per cent who think that it will worsen.
Additionally the findings revealed that worries exist over rising prices impacting upon consumers' personal finances. Just under two-thirds (62 per cent) think that the value of goods has increased over the last 12 months. Meanwhile, 80 per cent believe that prices are set to be higher in a year's time. In addition, Lloyds TSB also showed that the majority of Britons will believe that inflation will increase by between 2.5 and three per cent in 2008.
And with concerns about increasing prices, consumers could well be set to struggle more with managing their finances and so have to take out a bad credit loan. Earlier this month, a study from Datamonitor showed that the number of those unable to access traditional forms of borrowing is to rise 8.6 million by 2011 due to the effect of increasing utility bills and living costs, in addition to surging insolvency numbers.
Both Doug Mitchell & Tom Dawson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Doug Mitchell has sinced written about articles on various topics from Real Estate, Property Investment and Real Estate. Doug Mitchell is the CEO and President of Grace Realty Group, Inc., a Florida investor in value-added commercial real estate projects located in the Southeast United States. Grace offers individual investors debt and equity positions in the projects it re. Doug Mitchell's top article generates over 4400 views. to your Favourites.
Tom Dawson has sinced written about articles on various topics from Personal Finance, Parenting and Personal Finance. Tom Dawson writes for Essentially Home Loans where visitors can apply for online, and also focuses on. Tom Dawson's top article generates over 74000 views. to your Favourites.