Treg Loyden

In business, when inventory increases and sales do not, a few things happen, one of which is usually a price reduction. In the housing market, inventories are increasing. Bloomberg says housing inventories are expected to rise anywhere from 8 to 12 million in foreclosures/repossessions. These properties are to be dumped onto the U.S. market over the next few years. That is several years of supply of housing. Now stop and think about that for a second. If U.S. homebuilders did not build even one house, and U.S. homeowners didn’t sell one home, it would still take more than two years just to clear away all this additional, bank-owned supply. Meanwhile, 30 year interest rates are at an all-time low. Many believe home prices are now at 1998-1999 levels. If homes must go lower, how much lower?

For that answer we might look to the $60 trillion dollars in Unfunded US government liabilities and the measly $13 trillion US economy. As the USA seems well on its way to insolvency, borrowing money to survive, the short term values for house prices seem to be headed South. The US economy broke from its last ties to the Gold Standard back in the early 1970’s. And that is also when the last time America was the world’s lowest cost producer. Times have changed. Now we are no longer on tied to gold and silver in any way and we have not been the World’s lowest cost producer since Japan took that title away back in ’73.

So, what did a typical house sell for, say in Chandler, Arizona, back in the early 1970’s? Well I happen to know about one house that my own dad purchased for $33,000 at the time. For those use to houses sold in the 50’s & 60’s, it was a “large house”. It was an amazing one thousand six hundred and twenty nine livable feet. It was so big you simply could not say the square footage; you had to say it out loud with emphasis on each amazing digit. It was brand new, nice new neighborhood, close to schools and shopping, and on the “good side of town”. It was build to satisfy any ego with a good paying job and who had plenty of kids. Why it had not two bedrooms, but three! It had not one carport, but two! It had not one bathroom but two! And luxury? It had a huge “in the ground” built in swimming pool! That house of course would not be complete without a brand new Chevy “Suburban” all shiny in the open carport. At a whopping cost of $3,500, my grandpa gasped at my father, “Why that is the price I paid for my new house!” My father of course explained to my grandpa that his new house was purchased in 1959, which improvements have been made and they must be paid for”. My grandpa gasped that his new truck had cost him “only” $999 dollars and he “wouldn’t pay a penny more”. So my grandfather had paid about 3 times more for his house than his truck, but my father you see, as my grandpa smartly pointed out, had paid over 9 times for his house. In the end, my father was considered a genius when he sold the house in 1986, some 15 years later, for an amazing $76,300 dollars. That year he also traded in his 150,000 mile “suburban” for a new four wheel Ford Truck with all the extras. He liked telling everyone he could that he got $3,500 on the trade-in, the same price he originally had paid. What he failed to mention, was his new truck cost was only a few thousands shy of the $33,000 that he paid for the house. What he failed to say was that his new house in 1986 cost him $125,000 dollars. Inflation made Sellers winners.

Well today it seems that deflation is making Sellers losers. It’s a buyer’s market. Bargains are bargains and they are out there by the dozen. Costs are dropping like a rock. I for one would not be surprised if we see $33,000 “new” houses again, at least in far out areas of town. As for cars and truck prices, that market has yet to see the same price drops that housing has. Could we see the day where a new house and a new truck are worth about the same? Probably not. Could we see the day when a new house and a new truck trade at just 3 times over, like it did for my Grandpa back in 1958? Probably. Certainly a used house and a new truck prices are getting very close. So why the personal story? Because if anyone has the data and can through it into an excel chart, I would like to see a chart showing the year to year gap between the cost of a new house and a new truck. Perhaps when those two prices are at their closest, that will be the time to buy. Are we trading at 3 times over like it was in my Grandpa’s day in 1959? Not quiet, but we are getting very close. At 4 times over. A fast look shows that Trend Homes is selling a 1,700 square foot model for just $160,000 and a Chevy Suburban selling for $41,000. That’s 4 times over and certainly better than the 9 times over when my dad bought that $33,000 house and a $3,500 Chevy Suburban in the early 1970’s. Will America ever be the lowest Cost producer again? Well, for that answer, I will save for another blog.

If you would like to join my buyers club, come join http://www.cashflowdealsnow.com and http://www.fastbankdeals.com.

Once upon a time, from 1992 thru 2005, you could leverage the Good Economy. Hunt like crazy to find that one good deal, tie it up, close the escrow, fix n flip, and walla! You’re in the money! You have leveraged a good economy. People being people bragged of their exploits. Copycats jumped in and more and more investors profited. It was harder and harder to find a good deal. It was a Seller’s market. Tough on buyers, great for sellers.

Well times have changed. It is now a Buyers market; great for buyers, bad for sellers. So, how does one “Leverage a bad economy”? Answer: You must find even BETTER seller deals. That means bank deals. That means getting behind the secret dark vaults of the banks. That means finding deals that Cash Flow. Cash flowing deals in this market? You betcha. It can be done, heck it is being done right now. Just like before, good deals are hard to find in any market. But there is good news in this bad news real estate market. There are more millionaires made during a recession, a buyers market, than during the good times of a Seller’s market. That old adage, “buy when people are selling scared” certainly applies today. Sellers are running for the hills. Banks are the market, and they are scared to death. They are trying to systematize their sales, but the backlog builds like a dam that threatens to break free.

Yes these are economically tough times, but the savvy and smart have locked and loaded their investment guns and are shooting these ducks in the water with glee. They are buying great deals at rock bottom prices. They are then watching their deals cash flow. If the market goes south further, they are buying still more. When people are running for the hills, all kinds of rare opportunities pop up that are never normally available in any market. So, how to plug yourself into these crazy good opportunities? Well two ways that I know is to join a Buyers Club. Let yourself be known. Announce what you have and what you are looking for. Get in on a list of deals sent to you weekly or monthly. Position yourself to take on these rare opportunities. Now is the time to be cherry picking the best deals for yourself and flipping out the other deals to other investors. When this market finally corrects itself in one, two, or even three years from now, you will be the next “instant multi-millionaire”. Everyone will then be saying, “well of course if I had the money I could have done what he’s done. It isn’t rocket science”. Well they would be right but one thing is rocket science. That is keeping your head and realizing that both booms and busts, never last. The market always resurrects itself, like a boat that just won’t sink. If you would like to join my buyers club, come join http://www.cashflowdealsnow.com and http://www.fastbankdeals.com.

Arizona Foreclosures

Hi, well there is some interesting news out there. According to ForeclosureRadar, default notices rose 16.6% in California for the fourth-straight month in August. Foreclosureradar has been tracking foreclosure rates in California since March 2007. They will now offer data for Arizona, Nevada, Oregon and Washington after tracking those states for a year. Foreclosureradar’s search capabilities will allow readers "to dynamically drill down to the state, county, city and zip code level of their choice."

The good news is that Foreclosures are down 20.3% from a year earlier in Arizona. In Arizona foreclosures fell 12.2% last month after rising 28.8% in July. However, apparently the Banks took back more properties at auction than they resold in August in Arizona, pushing the inventory of REO homes up 4.79% from July, and 60.48% from a year ago.

It seems to me, Arizona is bouncing along the bottom. Everyone asks, “when will we see the bottom?”. I think this is the bottom and the stats are saying we are bouncing along the rocky bottom. Now the question becomes, how fast will the economic tides race in? The is anyone’s guess.

One bit of encouraging news is Warren Buffett says the “American newspapers are way too gloomy”. He says that, “the American Economy is well on its way to correcting itself”. As the average American sheds personal debt, as the unemployed learn to downsize and live with family & friends, the last thing to be shed will be the massive governmental debt structure. Once that happens, Americans will be back to being the best place to manufacture, trade, and work. Once the costly debt of our government is downgraded, devalued and restructured, America will be able to competitively compete again on the world stage.

Cash deals on real estate in Litchfield Park, AZ in 2010

If you are a cash buyer for real estate in Arizona you may be interested to know that there were 115 homes sold for cash in Litchfield Park, Arizona so far in 2010. This works out to be over 19 homes per month that sold for cash.

Also of interest to cash buyers- In Maricopa County, Arizona there were over 13,000 homes sold so far this year for cash. We know that financing is more difficult in recent times and cash offers some advantage.

If you are interested in getting more information on cash deals in Arizona. Please visit our website at fastbankdeals.com for more information. We then seek the opportunity to back it up with exceptional service.

Cash deals on real estate in Goodyear, AZ in 2010

If you are a cash buyer for real estate in Arizona you may be interested to know that there were 352 homes sold for cash in Goodyear, Arizona so far in 2010. This works out to be over 59 homes per month that sold for cash.

Also of interest to cash buyers- In Maricopa County, Arizona there were over 13,000 homes sold so far this year for cash. We know that financing is more difficult in recent times and cash offers some advantage.

If you are interested in getting more information on cash deals in Arizona. Please visit our website at fastbankdeals.com for more information. We then seek the opportunity to back it up with exceptional service.