What would Buffett do?
In light of the current uncertainty in the real estate market, if you were thinking of Jimmy Buffett, your answer may be, "Blend another Margarita." If, on the other hand, you were thinking Warren Buffett, your answer would likely be, "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."
Once upon a time this was the strategy of real estate investors. During the brief feeding frenzy that was 2005-2006, however, many threw caution to the wind as they broke traditional wisdom and gambled on quick returns. At no other time in recent history have people been empowered to make a quick buck by buying a piece of real estate, then selling it a few months, even a few weeks later at significant profit as the market raged out of control.
As the clean up of previously over-valued properties continues, many are seeing opportunities, as outlined by Warren Buffett's quote, that inspire us to envision a return to normal market conditions - although none can be certain of exactly when. Buffett's long-term investment strategy is drawing interest from savvy investors though, as mortgage rates continue to languish at 4 percent or below, and as distressed properties present opportunities to buy at tremendous discounts over their once lofty prices.
According to a recent article by Nick Caruso for "Real Estate" magazine, "one of every four homes purchased this year is going to be picked up by an investor." The lead to the article states, "Despite the exaggerated, negatively-spun media coverage of the housing market and the current hurdles consumers are facing in the mortgage industry, great opportunities do still exist in the national marketplace. Although the real estate market has only just begun its upward climb toward regular volume and higher property values, now is a great time to buy and a new, savvy, forward thinking consumer is stepping up to the plate to take advantage of today's unique market conditions. Enter: the investor."
As Realtors, we are often asked, "When will we hit bottom?" One answer to consider is, "The only way we will know for sure is when prices begin to rise and then we will have missed it." Those of you who read this column last week noticed that in some areas of our statistical reporting, those prices have already started to climb from their lows. Should this trend continue, how far behind can the other market segments be?
The magazine continues, "Investors are the most active and motivated segment of the marketplace right now for purely selfish reasons - there's money to be made.
"Although the days of fast flipping have fallen by the wayside, there is a sea of potential investors on the sidelines simply waiting to bite."
Even though most folks considering a real estate purchase experience at least some trepidation in making a move, those who make their living by making sound investment choices are entering the market as they see opportunities that appear to eclipse those found in the uncertain stock market.
As we have oft stated here, we all need a place to call home. You can pay off someone else's mortgage or pay off your own, but at today's interest rates the latter may be your key to building wealth.
Trust an expert... call a Realtor. To find a Realtor to represent you visit the Coeur d'Alene Association of Realtors website; www.cdarealtors.com. There you can also search available properties in the Multiple Listing Service.
Kim Cooper is a real estate broker, Realtor and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your commentary and feedback. You may contact them by calling 667-0664 or by writing to them at 409 W. Neider, Coeur d'Alene, ID 83814.