Enough about boom and bust in the housing market are some areas are seeing boom, bust, boom?
Buyers are taking a second look at areas decimated by the real estate downturn, according to an April 7 article in BusinessWeek.
First-time home-owners are suddenly entering bidding wars with real estate speculators from as far away as Spain and Germany, BusinessWeek wrote.
“I look for markets that are downtrodden,” Rich Lehrer, a North Carolina investor, told the magazine. “I’m expecting to get better yields than I would get on my cash.”
Sales on the Gulf Coast of Florida, California’s Inland Empire near Los Angeles, and the Las Vegas metropolitan area surged by more than 80 percent in February against the same month last year, the report said.
One person interviewed, a 31-year-old Las Vegas resident, scored a $140,000, 3-bedroom home that previously sold for $350,000, the report said.
So onto the million-dollar question: “Are we at the bottom?” Christopher Thornberg, an economist with Beacon Economics, asked BusinessWeek. “We are getting close.”
Most experts believe that in some areas the pendulum has swung so far in the opposite direction of the bubble that sellers can’t help but get back in the market. That said, it might just signal a floor to falling real estate prices, not a swing back north.
BusinessWeek said inventories — always deeply connected to price — are “falling fastest in markets where speculators and first-time buyers are driving the action. Those parties don’t have to put their own homes on the market to make a deal. It remains vexingly difficult for home-owners who have bought in the past five or so years to sell one property and buy another. On top of that, government incentives of up to $8,000 in tax credits for first-time buyers and low mortgage rates engineered by the Federal Reserve are luring shoppers who otherwise would be sitting out. If the government were to take away the punch bowl, markets that seem to be bottoming could well turn down again.”
This article was submitted by Kathleen O’Connor, a contributing writer for Biz2Credit. Biz2Credit is a small business marketplace that provides entrepreneurs with the latest industry news and financial advice. Send all questions to firstname.lastname@example.org.