FHFA Report: the Investor Upside
Wednesday, January 14th, 2009Released November 28, 2008, the Federal Housing Finance Agency report threw out some pretty staggering statistics about the residential real estate market. Home prices slid and additional 1.8% in the third quarter of last year, establishing a record decline for the Agency’s purchase-only index. And mind you – this is a 17 year-old index! But wait…there’s more.
The FHFA’s All Transaction Price Index slid 4% over the previous 4 quarters, marking the largest four-quarter drop in the index’s history (33 years).
Frankly, we could all sit around and bemoan the fact that:
- Arizona property prices fell 13.5%
- Florida property prices fell 16%
- Nevada poperty prices fell 20.9%
…all between Q3 2007 and Q3 2008.
Or we could do something with all of this seemingly dismal information.
As someone who used to be in the hard money industry, those firms are seeing tough times. I had a friend tell me they had just gotten a letter demanding a 1.9% servicing fee on all performing AND non-performing loans (retroactive to Jan. 1), and if you didn’t sign-off on it, you got NO service whatsoever on your investment. Seriously? Seriously.
Instead of taking the track of being a passive investor, current the market climate dictates that NOW is the time to take hold of your real estate investment portfolio. Following is some really cool info from the FHFA report that both real estate investors and professionals can take to the bank:
- Of the 20 ranked cities with the greatest price declines over the last four quarters, all but one (Las Vegas-Paradise, NV) was in California or Florida.
- Eight states exhibited quarterly price declines of more than three percent and three—Nevada, California, and Arizona—saw price declines of more than five percent.
- Prices fell in Q3 2008 in 41 states.
- The states with the greatest price appreciation between the third quarters of 2007 and 2008 were: North Dakota (4.0%), South Dakota (3.9%), Texas (3.2%), Alabama (2.8%), and Oklahoma (2.8%).
Real Estate Professionals: what better fuel is there than the above information to let your clients – primary buyers and investors alike – know that now is the time to buy? Mortgage rates are at historic lows, inventory is bursting at the seams and the REO market has plenty of listing to offload at substantial discounts. Need more ammo? Check out these benefits for real estate investors:
Real Estate Investors: tightened credit means a more favorable pool of renters. Former A-paper borrowers are relegated to renting, making the pickings less slim for today’s landlord. Rehabbers – this is the ideal climate to pick up properties in need of some TLC and then get them rented or sold in the short-term. Not intersted in rehabbing? There are plenty of favorable REO deals out there in areas that are prime for rental property across a broad spectrum of geographies. Need liquidity to get the deal done? Check out our blog entry on creative financing.
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