Real estate prices, as with most financial markets, tend to follow a pattern. For the purpose of this article, we'll call this pattern “The Real Estate Cycle.” There are many theories out there about The Real Estate Cycle, but the one I like best is called “The Great 18-Year Real Estate Cycle.”
Back in the 1930's a real estate economist named Homer Hoyt discovered that real estate prices seemed to ebb and flow on an almost perfect 18 year schedule. Hoyt's theory was later used and refined by now famed economist Fred E. Foldvary to predict the real estate crash of 2008. I'll get into more depth about “The Great 18-Year Real Estate Cycle” shortly, but to me the important part isn't necessarily the 18 year time frame, it is understanding that the real estate market operates in a fairly predictable cycle that can be seen and taken advantage of by smart investors.
The constant fluctuations of the housing market can mean many things in terms of property investment, rental rates and the life of a landlord. We know, for instance, that there is a higher percentage of renters in the United States than there has been in quite sometime. But what we haven’t addressed is that there are also more landlords.
I've spoken many times on my radio show about how fear is used to move us. Well, recently I spotted a great example. Just last week I wrote about how a mortgage “expert” was predicting a “
A growing number of real estate investors are using a self-directed IRA to finance their property purchases nowadays. That’s because a self-directed IRA can provide them with the opportunity to buy real estate and earn rental income without paying early distribution fees.
As we continue to go through Morgan Stanley's “Housing 2.0: The New Rental Paradigm” we're more confident that 2012 will be a big year for real estate investors. For one, the financial services company boldly concludes, “…gross rents are historically attractive relative to current distressed prices. Adding to this attractiveness is the fact that multifamily data shows rents continuing to rise.”
Optimism can only be rewarding if one takes action. Without it, it’s like driving a car that runs out of fuel; you’ll never arrive at your goal. Your past mistakes or apprehension about the future has nothing to do with what you can do today or what you should act upon. Decision-making may be risky but there are great results if it is coupled with a conscious effort to do what is right.
While homes prices continue to be on the decline, rent prices are actually on the rise and showed a 3 percent increase from January 2011 to January 2012, as opposed to home values, which dropped 4.6 percent during that same period, according to a recent Zillow Real Estate Market Report.
