Looking Ahead

In the cover story for its January 31st issue, Business Week Magazine details the housing meltdown and sets forth the case that home prices may drop another 25% before bottoming out.

While a 25% decline would be unprecedented, it’s certainly not out of the realm of possibility. Right now there are a tremendous number of unknowns at play: foreclosures are at record highs and projected to increase; more homes are on the market now than ever before; the wave of adjustable-rate loans resetting to higher rates hasn’t crested; and more and more people are stuck an homes with little or no equity to help them get out.

Plus: there’s the rising specter of a government bailout.

Now, almost certainly the home values in Atlanta won’t drop as much as other places in the country. We’ve certainly seen that so far: as cities like Detroit and Miami and San Diego have been seen home values plummet, Atlanta has held steady. Even today, though the Atlanta area is seeing price depreciation, it is mild in comparison to the rest of the country.

But, nothing is certain at this point, and we really won’t have any idea how bad the problem is for some time to come.

So what does all this mean for the real estate investor? Is there no money to be made in investing in real estate?

The answer is: certainly not. There is plenty of money being made every day by investing in real estate. There are plenty of investors who are doing well and are capitalizing handsomely on the current market.

That is: there are still areas of the housing industry that are thriving.

For example, for those who can get them, mortgage rates are exceedingly good right now. For borrowers who can put significant amount down, who have excellent credit, and who are looking to borrow less than the conforming $417,000 limit, interest rates in the fours are not uncommon; and the smart investors are marketing their properties to these purchasers.

It’s not as easy as it used to be, and investors may not be making as much as they used to, but the profit is still there for those who are willing and able to adapt to the market at hand.