There is a long history of real estate investing showing major appreciation in values following a recession. In 1970, the medium price for a house in the U.S. was about $25,000. A decade later, it had doubled to $50,000. In 2000, the priced averaged $125,000. Five times what it was in 1970. By 2006, it had doubled again to $250,000. Clear evidence that real estate investing is highly profitable.
Now is the time to actively get into real estate investing. A few more months might be too late. Year to date, national sales prices are up 12 percent. Month to month they have increased 3 percent.
Properties selling for $200,000 or less account for 49 percent of sales. Those selling from more than $200,000 make up 51% of the market. Each month there are fewer and fewer distressed properties on the market. The U.S. medium price for distressed properties hovers around $128,000. Up 3 percent month on month and up 11 percent year on year. However, these houses are selling for significantly less than U.S. medium price of non-distressed sales, which stands at $204,000.
If you are still interested in investing in distressed properties, now is the time to do it. Experienced investors recognize that now is the time for real estate investing while prices are still relatively low but steadily appreciating.
Many of the largest hedge funds are slowing down their pace of investing as fewer distressed house are available. Hedges funds like Blackstone ($46 billion in assets) and SAC Capital Advisors ($14 billion in assets) are working to improve their national rental management model. The fact they are slowing down their purchasing pace means less competition for the average investor.
Another big player, Goldman Sachs, got out of real estate investing just in time to avoid the crash that took most investors for a loss. Goldman Sachs jumped back into the market at the right time and is now slowing down their investing in-tune with the other major institutional investors.
The market is drying up but the well is not completely dry. As an example, mortgage analytics website Trepp reports that a year ago NYC had $4 billion in mortgages that were more than 60 days behind. Today, that number has fallen to $3.5 billion. However, the $3.5 billion includes some of the largest apartment buildings in NYC. Lenders continue negotiating a settlement that will minimize their loses. The market for affordable house has fallen even more than is refelcted in those numbers.
This combination of a tight market, improving economy, and big money slowing down are good indications now is the time for you to jump into real estate investing.
Here is what makes now the perfect opportunity for real estate investing. Although prices are steadily moving up, they remain about 20% below the previous high from 2006. Over the coming years, you can expect prices to exceed the 2006 high and continue appreciating as they have historically. You will never have this opportunity again in your lifetime.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.