When is a HOT MARKET Too Hot to Handle? When it’s getting ready to boil over, of course. We’ve been watching certain market trends closely here at REI Today, and we’ve discovered a TROUBLING OVERSIGHT that could affect YOUR FINANCES even if you don’t think you have the FIRST PENNY invested in real estate. I’ll tell you all about the HUGE FLASHING RED LIGHT most investors are BLINDLY MISSING and exactly how to turn that RED LIGHT into a green one for your investing dollars. I’m Carole Ellis. This is Episode 10.
So let’s turn a few blazing housing markets on their heads today before you end up getting burned, shall we? I’ve got some really exciting information on what is driving the majority of today’s high profile hot markets and the details on exactly how you can leverage some INSIDER KNOWLEDGE into sound real estate investments in these markets. First, though, I want to take just 30 seconds to give a quick shout-out to Florida, where the state legislature is taking the recent wave of crimes against real estate professionals VERY SERIOUSLY. State lawmakers are actually trying to make hurting a real estate professional its very own category of awful, and the move could go a long way toward minimizing the number of criminals who still think it’s a good idea to take pot shots at our community just because our members tend to spend more time than most in vacant houses. The bill hasn’t passed yet and it’s not unopposed, but you can get all the details about the proposed law and how other states are reacting to the move as well in the News & Networking section at REI.today.
Now, let’s get back to some heated EXPOSURE across the country…
First, the good news:
On a national level, the housing market is heating up. This past January, more homes sold and at higher prices than at any time since July of last year, and prices were rising faster than they have since April of last year. Perhaps even more exciting, nearly all areas of the country saw an increased volume in home sales, and EVERYWHERE logged overall appreciation. Sounds pretty positive, but what do those numbers really MEAN?
In a nutshell: It’s a good time to own real estate. But are happy days really here again?
Before we crack out the confetti, let’s take a look at the BAD NEWS. On the surface, it doesn’t sound so bad: There are a limited number of homes for sale, and, as a result, prices may be RISING TOO FAST.
You’re probably thinking to yourself: hey, I can live with that. I’ll be happy to sell homes that are appreciating “too fast” all day long. How many can I buy right now? And you’re not the only one. But here’s the thing: Prices are rising TOO FAST because there are not enough of a CERTAIN TYPE OF PROPERTY available in most markets. That property is the “starter home,” and we talked about it a little bit in episode 6 when we discussed how adding a certain SPECIAL word to your listings on these “lower tier” homes could add thousands to your sales price. A starter home is, as the name suggests, a property that a first-time homebuyer would purchase. They are usually relatively modest, with two or three bedrooms and one or two bathrooms. They’re NOT glamorous, and median price on such a home tends to hover, depending on what area of the country you’re in, in the broad range of 70 to $150,000, although, not surprisingly, in really hot markets like many out west, those properties might go for half a million or even much, much more.
And here’s the kicker: because these homes are relatively small and relatively plain, builders and developers are not usually in a huge hurry to build them. As a result, there just aren’t enough in the market right now. Sure, there are some builders out there who are starting to “dabble” in this market, but at this point in time, there are far, far fewer affordable, accessible starter homes in most market, particularly “hot” markets, than there are buyers. And that is what is driving prices up so quickly in so many of these markets.
So what does this have to do with you and your finances? Well, if you LIVE IN or INVEST IN one of the markets without enough of these homes, then you could be living in a bubble and even banking on that bubble not bursting without even knowing it. Most homeowners and even most investors tend to assume that because the real estate market is cyclical, there’s really no way things could go really south quite yet. After all, we’re just barely OUT of the last downturn. However, NAR chief economist Lawrence Yun recently warned that when the spring buying season hits, home prices could temporarily skyrocket in many markets, which could, if those markets do not have some sort of new housing inventory in that “starter home” bracket coming soon, mean that the markets get too high too fast and eventually bubble over and even start to sink – taking your properties along with them.
So what should you do? The solution is easy and free: Check out the building permits in ANY AREA where you are considering investing AND, furthermore, check out what construction is actually going on in that local area. If there are no “starter homes” going up but the market is skyrocketing, beware. It doesn’t mean you can’t invest, but it does mean you need to keep your timeline for your exit strategies short and varied, and you MIGHT want to seriously consider options for helping out new, would-be homeowners via creative financing that could not only enable you to market and sell your properties OVER market value, but create a steady stream of motivated buyers who ONLY want to work with you. Sound appealing? Of course it does! And at REI Today, we’ve got a special report on “fine print” so to speak that you need to know in order to make yourself into a creative financing powerhouse in no time. You know where to find it: in the REI Today Vault, of course! It’s called (this is easy) REI Today’s Intro to Creative Financing, and it clearly details just how these methods work. Get your access by texting REITODAY no spaces, no periods, to 33444, and I’ll provide fast, free access to that report as well as a lot more seriously insightful stuff that will make your real estate investing safer, faster, and more profitable. So just text the word REITODAY with no spaces or periods to 33444 or visit REI.Today/vault to get access now…
When you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country! Just text the word REITODAY with no spaces or periods to 33444 or visit REI.today/vault right now for your free membership.
Thanks for listening in, and be sure to think of us this afternoon when you’re in your kitchen or bathroom. Here’s why: we’ve recently discovered a HUGELY COMMON MISTAKE that investors are making all over the country when it comes to rehabbing older investment homes. If you’re doing this (or thinking of doing this) you could be literally DEMOLISHING your flipping profits. Don’t miss our next episode where we’ll reveal this TEMPTING TV TRICK that just plain DOESN’T WORK and, until then, REI Nation, remember this:
Your best investment is ALWAYS your own education.
Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.