Flipper Blog.com

Here we go again, yahoo has an article on the recent housing report that paints a less than rosy outlook…

http://biz.yahoo.com/ap/080225/economy.html

Sales down, median price down, inventory up…  inventory has balooned to over a ten month supply… are you kidding me ?

This coupled with wave after monstrous wave of foreclosures… flooding the already bloated existing home inventory… are you scared yet ? Do you think we are at the elusive “bottom of the market” ? Are you ready to jump back in and take a chance on an sfr in a great neighborhood that doesn’t quite break even ? 

I don’t think so Are you crazy ? Have you ever heard the term “catch a falling knife” ?

If you have, then you understand…. if not, then let me explain a little…

First, lets take a blunt look at the current situation:

1. Slowing Sales of existing homes… means fewer buyers… thus, the homes currently on the market will take longer to sell.

2. Rising Inventory levels… currently at over ten months… this is a function of the above… as fewer and fewer buyers buy up the inventory, fewer homes sell each month (slowing sales even further)… and as the natural order of things brings more homes into the market, the pace of new listings outpaces the number of homes selling each month… equalling a continously rising inventory level.

3. Price decline… people, econ 101 here, supply and demand… when demand outpaces supply, PRICE GOES UP. When supply outpaces demand, PRICE GOES DOWN. After reading issue 1 and 2, you now have a very clear picture of how SUPPLY is clearly outpacing demand… thus, its very simple… prices are falling steadily.  This is not going to change until the situation flips again… until demand begins to handle the currently supply, price will continue to fall… once demand can handle supply, prices will stabilize, then once demand begins to once again outpace the supply, then, and ONLY THEN will prices rise again….

So, now does the falling knife saying make more sense ? I hope so, because, if you buy right now, you are trying to catch the falling knife… demand is nowhere near handling the current supply… and please don’t forget the flood of foreclosures… they are creating an endless supply to the market… this is going to take years people… years… not months…

In closing, I want to remind everyone that there are always deals… in no way shape of form am I saying DON’T BUY ANYTHING… what I am saying, is the average “deal” out there right now…. probably isn’t a deal… but, if you look hard enough, if you haggle, if you wheel and deal, and maybe even get lucky… you can find deals… deals that cashflow, deals that are flippable… deals that you can wholesale… but, please, please be careful out there, and don’t let the “experts” who have a vested interest in you buying or selling convince you that “now is the time to buy” as if a blanket statement about the overall market will insulate you from making a bad deal.

Flip On Flippers.

ManDrake

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