More Real Estate Predictions

Time for yet more of my completely biased and unresearched opinions on real estate...

The general consensus is that the housing hot streak has ended. I would agree with that sentiment. But as I was alluding to in my earlier real estate predictions, the mainstream media has a myopic view of the market and define it by the hot markets - Vegas, Florida, California. These markets may indeed see a significant slowdown in sales, a rising inventory and likely even depreciation in prices. But the majority of the country will weather this slowing period by sustaining current price levels. Housing has been historically resiliant to downward movements in price, and will continue to do so.

Secondary and tertiary markets will continue to have great undervalued investment properties. Being a landlord isn't for everyone, obviously, but with mortgage rates rising and currently high prices which are unlikely to drop, it's expected that rents will inch higher in the mid-term future. In many of these smaller markets it's easy to find rental properties will will easily generate profit with current rent levels, house prices and tax rates - with a lower barrier to entry due to stagnant/undervalued prices.

Update: Here's to some great timing - The local Rochester newspaper has two articles today which fit nicely with the above: Area homes undervalued and Landlords' costs force likely uptick in rents. (Though I would argue that rents will rise because of more forces than costs, the rising rates will help keep renters from buying their first homes, causing higher demand in the rental market).

[For newer predictions check out Real estate predictions for 1Q 2007. To see my back history, check out Real Estate predictions.]