3 Reasons the Housing Market is Back

recession-recoveryOver the past 2 years I’ve written a number of blog posts commenting on the changes in the Real Estate market. Many of those articles were motivated by information I read in the Wall Street Journal, Trulia.com or other reputable new sources.

For at least the last year I have been hesitantly optimistic about the health of the housing market. Some recent first-hand experience has pushed me past hesitance. Here are 3 real reasons that the housing market is back.

Reason 1: I’m Losing Property Management Clients

When I started my property management company, a large number of people hired me because of the down housing market. Some of these clients had to move and owed more on their primary residences than the house was worth. Others came to me over-leveraged with a portfolio of rental units. Recently the tide has turned.

In the past 6 months I have lost approximately 100 managed units due to an improving market. Houses that were once underwater now have equity. Over-leveraged rentals have become break-even at worst. The cause for the improvement is increased demand. More consumers want to buy a home. More investors are ready to get back into the Real Estate market.

Reason 2: Interest Rates are Still at Ridiculous Levels

As I write this article, the interest rate for an FHA conforming 30-year fixed rate mortgage is 4.5%. When I bought my first house in 2004, my rate was 6.25 percent. I got a great deal in 2004. Even though rates are up from a year ago, they are still ridiculously low.

Qualified buyers are taking advantage of these low interest rates. They are investing in their futures by betting that rates will rise in the future. So what we end up with is an increase in the number of qualified buyers in the market for nice homes.

Reason 3: I Haven’t Seen So Many Good Deals in a Long Time

If you have been around Real Estate investing for any period of time, you are probably on a number of email lists. Every morning I mailbox is full of properties from other investors and wholesalers.

Three months ago I met a new wholesaler in my market. He’d only been in the business for about a year and he is assigning 10-12 properties every month. I’ve seen this story from 3-4 other “newbies” in my market.

I have not seen so many good deals in quite a long time.

The housing market is back. If you’ve been sitting on the sidelines waiting from a sign from above, this is not it. But if you want facts, now you’ve got them. Get off the bench and get back in the game.