Is now the time to snap up those distressed bargains in USA?
The wise investor buys low, sells high. Housing in USA is at a low. So it would appear that the distressed housing market in the USA presents the perfect buying opportunity. I don't think so.
This is just my opinion. I am not a sophisticated real estate investor, but I have made a lot of money listening to my gut, paying attention to basics and not getting caught up in real estate hype or falling for the quick payoff.
Here's what I see:
1) 22 Banks in the USA collapsed. More closures are coming.
2) US equities took a beating to the tune of a 40% loss in value. Experts say it has not hit bottom.
3) US housing market plummeted $2 Trillion in value. The blood-letting is not over.
4) Gold fell 30%.
5) Oil is under $50 a barrel, forced there by OPEC. It will go back up, along with interest rates.
In 2009 unemployment hit 8.1%. It is expected to hit 9.5% this year, with high unemployment forecasted until 2011.
According to the 2009 MetLife study, 50% of Americans say they are 2 paychecks - thirty days - from being unable to meet their financial responsibilities. Americans at all income levels have saved less than at any other time in this generations history.
Increased unemployment means increased defaults, with even more houses dropped onto an already bloated market.
The main questions for me are: "Who is going to buy these "bargains" once you snap them up?" You will be carrying all the utilities, insurance, maintenance and repairs for years. "What if the market does not return to the former over-priced sellers market is was before?" "Can you afford to wait five or ten years to recoup your investment?"
I have been looking at international markets that are less dependant on the US market. They seem to be fairing this global financial crisis a little better. Ask your financial advisor - if you are still speaking to them.
Stay healthy my friends. Roberto Chocolate