A quarterly Wall Street Journal survey of housing data in 28 major metro areas shows that the glut of unsold homes listed for sale is shrinking in most of them. In many cases, sales have been stimulated by investors who are grabbing what they see as bargains on homes that can be turned into rentals. Metro areas with the biggest drops in for-sale signs include Sacramento and Orange County in California and the Virginia suburbs of Washington, D.C.
The recent headlines give a mixed picture. On Monday, the Census Bureau reported that new home sales in September were at a seasonally adjusted annual rate of 464,000 units, down 33% from September 2007. The median sales price for new homes in September was $218,400, down 9% from a year earlier. Last week, the National Association of Realtors said sales of previously occupied homes in September edged up 1.4% from the depressed year-earlier level, the first such rise since November 2005, largely reflecting sales of foreclosed homes.
Housing analysts caution that many homes that aren't currently listed for sale may hit the market in the next year or two. This looming supply includes pending foreclosures and homes temporarily taken off the market while their owners await stronger demand. With banks chopping prices on foreclosed homes, other sellers are giving up and taking their homes off of the market.
Meanwhile, credit remains tight, consumer confidence is crumbling, and job losses are removing some potential buyers from the market while pushing others toward foreclosure.
Mortgage rates jumped Monday amid continued turmoil in the credit markets. Some mortgage firms quoted rates of 6.5% or more for standard 30-year fixed-rate loans. That was up from an average of 6.2% last week.
Despite all the gloom and doom, some people believe it isn't too early to pick up bargains. One key, they say, is a deep understanding of the local demand for rental housing.
You can't go wrong if you use the basic math. As yourself, or better do some research on how much you can you the property for. If the yearly rent = 10% of what you pay for the property, then it is worth looking into.
Now is the time to pick up rentals and invest, every 3/2 that you pick up below $145.000 and that you can rent at $1,300 a month is worth considering. Even if you don't count on making 12 months rent but just 11 months that is still an income of $14,300.
Now deduct insurance and taxes, say $4,300 then you're left with $10,000 0r 6.9% return on investment. Not bad in today's market add to this the fact that you have picked this home up at a bargain price. You can't go wrong.
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