September of 2009 showed a 9.4 percent increase in existing home sales from August, and a 9.2 increase from September 2008.
Thanks to the government credit for first-time home buyers, we are seeing some of the highest home sales activity since July 2007. Higher sales activity means that the housing market could start getting competitive again. This is great news for investors who want to wholesale real estate.
The government has created several new economic stimulus packages in the last year, and most of us are wondering how much they’re helping the economy. Since 45 percent of all homes sold in the past year were to first-time home buyers, we can assume that this package is doing its job. The slump in the housing market was a huge contributor to the recession, and is the reason why home values are so low right now. It’s also why real estate wholesalers aren’t experiencing the profits they have in past years.
The principles of supply and demand apply to the housing market just as they do with other commodities. During a recession, few are interested in purchasing a home, especially their first home. If they lost their job and had to foreclose, it would make it nearly impossible to get a home in the future. The government assuaged those fears by offering $8,000 to all first-time home buyers, and got the market going again.
Real estate wholesaling requires that you get homes for way below retail prices and flip them for substantial profits. Wholesale profits haven’t been so hot in the past year because home values are low. If existing home sales continue to increase, we will see fewer available homes throughout the United States. With the decrease in inventory will come increases in value. Once homes are worth more, real estate investors can make higher profits on their deals.
So what can real estate wholesalers do now to ensure as much profit as they can? Build up a portfolio of homes. Buy properties now, while they’re still cheap, and hold on to them until their values go up. You can make even more income if you fix them up and rent them out in the meantime.
Spend this time building your buyers list and marketing, so that you have people to turn your properties over to when they’re worth more.
If you want to learn more about real estate investing and “The REI Lifestyle,” please visit Wholesale Real Estate, then visit Michael Kimble’s blog at Wholesale Real Estate blog.