There Are Still Real Estate Bargains
Low inventory in many urban real estate markets has been pushing prices up
, making true bargains fewer and further between. Still, there are bargains available in some markets. As long as you don't mind cleaning up some sheet rock, laying carpet, or installing new doors Phoenix, New Orleans, and Atlanta still have some great older homes for sale that can be fixed up and sold for a substantial profit.
For those looking to buy a starter home, this is not a good time to be in the market in almost any city. Sure, realtors will tell you that when supply dips below demand it has the effect of driving prices up, and so since we've reached what many agree is the bottom of the market in most areas prices have nowhere to go but up. That makes buying a home now seem like a good investment.
But while that description might help Realtors to sell homes, it doesn't tell the whole story to a buyer looking to get into real estate - especially for the first time. The rest of the story is that when inventory is low, the inventory that is on the market tends to be less desirable. The homes that are on the market now, quite simply, are homes that the current owners can't (or don't want to) pay for, and they're homes that another buyer hasn't snatched up yet.
And while Realtors might tell you that a specific home is a "steal," the great deals on desirable homes that do come onto the market don't last long, and first-time homebuyers rarely get a crack at them. Realtors have plenty of qualified buyers waiting, and when they list a good bargain they call those buyers first. Selling a home they list to a buyer they represent allows them to double-down on commission.
Therefore, a first-time homebuyer should sit tight, save a little more money, and get into a position to move on a home once the market starts to tick up and inventory expands. There are plenty of people sitting on properties right now, waiting for the market to recover. So inventory will not only be larger a couple of years from now; it will also be of a significantly higher quality.
The market is a little more friendly to those who are buying rental homes, since what makes a good rental and what makes a good primary home are very different. The prices on newer construction in any of the developments that sprang up during the real estate boom has plummeted, marginalizing many of those well-planned communities. But those homes are good for renters: they tend to be attractive, well designed, and clean; and they tend to be constructed with materials that are easy to maintain.
There are also bargains to be found in sunbelt communities that have tended to attract retirees. When an older homeowner dies, his heirs often can't afford to keep his home, forcing them to sell it regardless of whether the market is strong or weak. Many of these homes require extensive refurbishment, but they can be available at fire sale prices, making them great investment vehicles.
In certain cities, these homes are more available (and more steeply discounted) than in others. But even in depressed real estate economies, rental rates continue to be strong because so many people have sold their homes and become renters again. If you're willing to replace windows, fix tile, and hang new doors Phoenix, Atlanta, New Orleans, and other sunbelt cities can be a good bet.
by: john67554
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