Lost in the commotion last week was a comment by former Federal Reserve Chairman Alan Greenspan. Remember him? Once upon a time we waited on and measured his every word.
According to an article he wrote for “Emerging Markets” magazine, Greenspan believes the U.S. housing market will start to recover in the first half of 2009.
I agree with him. Not because I understood anything he said beyond the basic statement. After all, NPR‘s show Marketplace no longer does its weekly interpretation of what the fed chair said.
I’m sure my reasoning isn’t anywhere near as complicated as Greenspan’s anyway. Why do I think we’ll see prices level off in the first half of next year? Easy. The $7500 first time home buyer tax credit goes away on July 1, 2009.
Oh, things will look as if they’re still slow over the winter. After all, “We want to wait until spring” just might be the single phrase Minnesota Realtors hear most often. Well, either that or “we’re just looking”.
Here’s what I think is going to happen if you wait for warmer weather to buy or invest. There are going to be all kinds of people out looking, trying to beat that deadline. They’ll be looking for that perfect house, or great cash on cash return; and just like they did in 2005, they’ll compete for the “good deals”, forcing prices up.
Smart shoppers will look over the winter. Why? Historically, the best buys of the year have always been found between October through January. There are less people looking. And this year, as the banks aren’t going to wait for the spring market to move inventory, there will be more to chose from than ever before.
I can’t believe the deals I’ve seen in just the last two weeks; a cash flowing duplex near Lake Nokomis, one in Crocus Hill, and a charming 1920’s five unit building in southwest. The “worst” of them has an 8 percent cash on cash return.
Contrary to what the media has lead us all to believe, loans are available. Yes, lending standards have changed, but they’re not ridiculous. Good credit, a job and a little bit of savings still go a long way.