Folks, I’m going to go out on a limb and say that when we look back next year, we’re going to see that September 2008 is at the bottom or is part of the bottom of the real estate market collapse.
Why? We had a call on the Ilyce Glink Show this morning from Carmen, a 30-year real estate agent in Lilburn, GA this morning. Carmen said she has never seen prices where they are now in the 30 years she’s been in the country. She has 4-bedroom, 2-bath house listed for $20,000 and she says it’s in good shape. She also said, and this is really where I think everyone should sit up and pay attention, houses that are listed for $30,000 are currently rented for $1,000+ per month.
So, you can buy the asset for $30,000 and rent it for $1,000 per month. Now we’re at a cash-positive environment that makes sense for investors. Sign me up!!
Even if you discount both the price and the rental income, this is the first plank of a real estate market bottom: an environment where investors can rent a property for less than it costs to own it.
Carmen says the banks have woken up and are now ready to divest of all their real estate holdings.
On the other side, for folks like WSB listener Chuck, who has had his house priced at $217,000 for 7 months and had only 7 showings (a price all of the Realtors felt comfortable with). Now, he’s being encouraged to walk away and have the bank foreclose. Properties in the neighborhood similar to his aren’t selling at $174,000.
For Chuck and others like him, who are walking away from their homes and a great part of their net worth, it could take 5 to 7 years for the real estate market to get back to where they were 2 to 3 years ago.
For anyone buying now, it’s beginning to look at lot like Christmas.
Sept. 14, 2008.