Watching the stock market has been quite the roller coaster ride recently. In fact, Magic Mountain ain't got nothin' on this ride. I am reminded of a meeting I had a few weeks ago where I was able to speak with Andrew Waite of Personal Real Estate Investor Magazine. One of the interesting things we discussed is the amount of money being poured into "Self Directed IRA's." These are vehicles that allow people to purchase real estate instead of staying invested in the stock market. Mr. Waited gave me an example that was very interesting, he told me that they are seeing larger and more whole numbers being added to these types of accounts. For example, in the past, it was more common for them to see "even" numbers like $100.000.00 deposited where it is becoming more common today to see "whole" numbers being added. Numbers like $632,432.59 indicating that people are choosing to move their entire portfolio into a Self Directed IRA so that they can purchase real estate while prices are down. Mr. Waite even went on to tell me that, it is pretty hard to lose your "entire investment" in real estate.
It is also interesting to talk to people about what "smart money" does in "boom" and in "bust" times. Think about this... In 2004-2005 the masses wanted in to the real estate game. Many people were really excited about real estate and didn't want to sell their property because they loved going to Zillow.com to watch their homes value shoot up by $10k per month. Now, go ask a bunch of those people if they would sell you their home for the price they think it was worth back then. You think they would jump up and sign the contract before you had a chance to say.. "Just kidding..."
Now, come back to 2008 where "no one" wants to talk real estate, banks don't want to lend you money to buy real estate and it sounds like a really stupid investment to many people. So, in a few years, do you think someone that actually "takes a chance" and buys a home or Heaven forbid, an "investment property" in this market might look smarter than the average bear?
Now that inventories are up and prices are down, what makes sense for you? Last month, I participated in a "round table discussion" with people from Washington, the Brookings Institute and from the Nation Association of Realtors etc.. The topic was, will gas prices change the way people buy/invest in real estate. I was invited to the call because of the research I have done on the topic of light rail here in Arizona. (watch for the Nov. issue of Realtor mag!) We discussed trends in the market both locally and nationally. Let's just say, many people firmly believe that urban areas, close to public transportation, make a lot of sense to consider. As an owner, the convenience factor and the fuel savings can be a huge benefit. As an investor, studies have shown properties near light rail lines tend to appreciate at a higher rate that those not close to the line.
I am enclosing two tools people can use to research properties. This first is this link to investment property research. if you are a real estate investor or a potential real estate investor, feel free to take a look. Many investors have been buying homes near light rail for the past couple of years in anticipation of the grand opening. I am talking to others looking at areas along future extensions (hint, the Mesa extension is a great example) already as long term outlooks make sense to some of them.
I have also enclosed this "map based" mls search link along with a sample search of homes near light rail around Tempe's Mill Avenue District for anyone that might want to zoom in and out of different areas to get an idea of pricing, availability etc. Take a look!
For the month of October, we have gone