Sunday, May 26, 2013

All predictions for the U.S. housing market have been positive for the year ahead, building on the recovery in 2012, so why worry about wholesaling in a down market in 2013?

Few doubt that we will have a stellar year for housing in 2013. A few markets may not have hit bottom yet, but around 80% of major U.S. metros saw dramatic improvements in 2012 and this is expected to continue in the New Year.

Housing prices and values have been heading up, inventory down, marketing times have been slashed and more than $1 trillion has been added to home equity in the last 12 months. Many have even forecast home prices to rise another 10-20% in 2013, making it an incredible year for real estate investing.

However, the height the real estate rebound will hit in the next year will certainly be somewhat dependent on the broader economy. This is where the real threat lays and why real estate investors still need to be prepared for wholesaling in a down market, at least in some areas.

The fiscal cliff, although certainly over-hyped in the media brings many threats from budget cuts to higher unemployment and higher taxes which could crush spending, economic growth and see a significant amount of flight capital and talent in the air, even if only inter-state and not out of the U.S.

The revelation that 2012 holiday sales reverted back to the depths of 2008 is a sobering sign that not all is well, and at least that Americans are being much more cautious about their spending. Another tough financial year for America will certainly have an impact on the housing market. This doesn't necessarily mean preparing for wholesaling in a down market all over the country but it does mean being ready for it in select markets and in some cases not the markets investors are expecting.

On the bright side there will certainly be more distressed properties and foreclosures available for flipping than even the world's richest billionaire Carlos Slim could take on by himself. There are literally still hundreds of billions in non-performing loans in the pipeline which will make great deals for investors over the next 12 months.

Even in the hardest hit areas where home values continue to decline there will be great profits for wholesaling in a down market providing investors know how to market themselves and insist on sufficient spreads.

However, most important is anticipating what trends will be seen in shifting demand for types of housing and the areas which are most in demand.

Technology will have a much larger influence than most imagine and a tough retail year will spur innovation and adoption of tech faster to cope with it.


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