Now is the time to invest in residential real estate

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As housing falls, short sales becoming common - Real estate - MSNBC.com

I think this is the harbinger of to invest now. . .no. . .I am not exactly timing the bottom but now. . .the fact that short sales are happening means that the market is starting to unwind.

Until people are willing to take a loss. . .the market can't unwind.

Need to find a residential REIT now. . .

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I agree!

Still, I do think it'll be at least a couple of years before the housing market in general picks up.... Consumers in general have to stabilize before they can even tackle a big ticket buy. Plus, supply still greatly out-weigh demand right now. This, especially in light of a recent report on large job losses.... Consumers tend to trail market conditions....

Banks, however, should correct much quicker. Many have already shut off practices that caused this subprime mess to begin with.... So, that's what I am currently looking into right now, before REITs....

But all this is highly subjective and even geographical. So, please take my speculations with a grain of salt. I agree that, rather than trying to time the market, now is as good a time as any to pick up REITs.

[Merch]

I agree with BA for the most part.

I have started investing in sector funds aimed at banks and brokers. I believe that the floor was in a few weeks ago, and moved some money around.

I don't think the housing market has bottomed yet. There is still a lot of supply out there, but you are seeing pockets of appreciation in Nashville and areas in Texas.

I think if you are going to invest long term in an index fund of REITs (think Vanguard or Fidelity), it might make sense. I mean it might drop what 5% or 10% more.

I am probably going to wait until the fed starts raising rates and then start building a REIT position. Just my thoughts.

[banditfist]

We are not even half way through the housing downturn.
CNBS is trying to say that we are coming out of recession when two months ago, they were denying that we were in one. On average, a recession last 18 months. This recession is not going to be average. The sticksaves that Congress and the Fed are trying to do are only going to prolong the agony.

But residential RE if you plan on living there for 7-10 years, AND you understand it is a place to live and not an investment.

[jIM_Ohio]

Remember what happens when economy or a market softens.

The middle class and upper class people with cash on hand improve their positions. In the case of housing it means refinancing at really low rates.

What this will do is make people think twice about selling their house because they have such a cheap loan.

On the flip side the poor people, lower class, and cash poor types will struggle and be the last people off the sinking ship. The market will go down down down for them.

I point this out because the issue will be "haves" and "have nots". Each will see the market differently.

Investors in residential real estate will be the haves. If someone has an investment already, I doubt they could improve their personal situation much. Maybe people invest by starting to rent, but I think that will be few and far between. I would think maybe 10% of the population owns 2 or more residential properties (meaning 90% work to own the one house they live in) and that is the extent of the average person's investment in residential real estate.

Generally speaking, residential real estate would yield about 3% per year, I think. It would keep pace with inflation, but not beat it by much. Most advantages are in taxes and write offs, not the property itself.

[JBinKC]

I think a likely corollary of our current housing situation is Japan's bubble in the late 80s especially if our lawmakers begin to restrict immigration. I think our cheap currency and population growth is a way to solve the problem.

Assuming there is little population growth the only desirable real estate opportunities IMO to come through subprime crisis is the kind that has a very limited supply (i.e. lakefront, oceanfront, condo in Manhattan)or ag land.

The areas with a large supply overhang of real estate would likely underperform.