Making Money in the Real Estate Bubble

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An investor in any market will tell you that in order to make money that market needs to be in motion. That is either increasing or decreasing and it is true with stocks, bonds, commodities and real estate. The question is if the real estate market is decreasing how to make money in it.

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You don't turn profits in stable markets. What you need to know how to do is manipulate the buying and selling of stock in both markets. When the NASDAQ was going through its own bubble cycle there were still people who were making millions by making adjustments to their style of investing so that it fit into the current market.

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It is obvious that those investors who purchased at the top of the market and hung on to the declining stocks lost a lot of money. Understanding the different types of trading and how to manage risk can also be used to invest during the current bubble in real estate.

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Remember that no one can predict the future. If anyone ever brings up the term "sure thing" when talking about investments you should immediately ignore them. Especially true if that person is talking about entire market movements. Taking notice of when the prices of stocks increase or decrease or even when showing strange behavior is easy to do. Predicting those changes is much more difficult.

Years before the NASDAQ correction happened Warren Buffet believed that the market was over-valued. Being a value investor Warren took the interesting approach to remain on the sidelines. Then again there are active traders that look to downturns in the market to make their money. Either method could be successful when applying it to the bubble in real estate.

When it comes time for an over-valued market to correct itself there are several ways it can happen. There are investors that think the real estate earnings are out of balance when talking about price to earnings ratios. These ratios refer to the amount of rent collected within a year versus the purchase price of the property. Normally that ration should be right about 150.

There are some areas right now that the ratio is around 400. This earning-ratio could be corrected through the decrease of prices, the increase of rents or some sort of combination. There are some financial experts that say the real estate market could take 20 years to correct.

So that brings up the question of what you are going to do. Will you wait a possible 20 years for the market to change or will you adjust how you invest to make money now? When you talk with financial advisors they speak in terms of controlling the risk relative to the potential to gain in the investment.

If you understand these concepts and follow these steps anyone is able to learn how to invest at times when others perceive the market as a bubble that is dangerous and risky.

Making Money in the Real Estate Bubble

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Oregon Real Estate

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People who want to buy homes somewhere peaceful, tranquil and in the vicinity of the sea will find the Oregon coast a perfect location to build the homes of their choice. The sound of waves splashing on the beaches coupled with the never-ending view of the spectacular ocean has made the Oregon coast an attractive real estate market for homeowners and investors alike. With property values burgeoning in recent years, Oregon coast real estate is an ideal investment option for those who wish to settle in the idyllic location of the region.

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There are a number of real estate agents that specialize in helping potential customers buy and sell property along the Oregon Coastal region. First time buyers and sellers are advised to seek the guidance of an expert real estate agent to make the right decision and handle the legalities of buying or selling property.

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Situated amid the fabulous Pacific Ocean and the Coastal Range Mountains, the Oregon coastline presents an unforgettable experience. It encompasses the pristine exquisiteness of the Pacific Northwest and offers a unique coastal way of life that many people fall in love with.

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The Central Oregon Coast covers Lincoln County, the southern end of Tillamook County and the north end of Lane County, as well as the enchanting Heceta Head Lighthouse and the popular Sea Lion Caves.

A majority of the people residing here were initially attracted to the picturesque splendor that the mighty ocean presents. Many people visit the state and then long to live in this area and enjoy the unique experiences and way of life. While some have succeeded in procuring a property others have failed due to the exorbitant prices of properties in these fabulous locations.

Oregon coast real estate encompasses an extensive range of homes, land, farms and commercial properties. There is something for everyone in this beautiful, scenic and generally peaceful area of Oregon.

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Housing Bubble Causes - Why Did it Happen?

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The Great Housing Bubble was caused by an expansion of credit that enabled irrational exuberance and wild speculation. The expansion of credit came in the form of relaxed loan underwriting terms including high debt-to-income ratios, lower FICO scores, high combined-loan-to-value lending including 100% financing, and loan terms permitting negative amortization.

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Addressing the conditions of expanding credit is a legitimate focus for intervention in the credit markets. Another major lending problem is unrelated to the terms: low documentation standards. The credit crunch that gripped the markets in late 2007 was exacerbated by the rampant fraud and misrepresentation in the loan documents underwriting the loans packaged and sold in the secondary mortgage market. It is essential to an evaluation of the viability of a mortgage note to know if the borrower actually has the income necessary to make the payments. When investors lost confidence in the underlying documents, the whole system seized up, and it was not going to work properly until the documentation improved to reflect the reality of the borrower's financial situation. Any remedy for the housing bubble must address the issue of poor documentation in order to facilitate the smooth operation of the secondary market.

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There are some factors that created the Great Housing Bubble that cannot be directly regulated. One of these is the lax enforcement of existing regulations as described previously. Even though lenders and investors lost a great deal of money during the price crash, their behavior during the bubble was still predatory. Lenders peddled unstable loan programs to borrowers who could not afford the payments. They did not do this to obtain the property as is ordinarily the case with predatory lending; they did it to obtain a fee through loan origination. Since they felt insulated from the losses to these loans being packaged and sold to investors, they were in a position to profit at the expense of borrowers, the definition of predatory lending.

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Another factor that cannot be regulated is the crazy behavior of borrowers caught up in a speculative mania. It is not possible to stop people from overpaying for real estate, but it is possible from preventing them from doing so with borrowed money. If people wish to risk their own equity in property speculation, it is their money to lose, but when lender money is part of the equation, the entire financial system can be put at risk, which it was during the Great Housing Bubble. The fickle nature of borrowers became apparent during the decline of the bubble when many borrowers behaved in a predatory manner refusing to make payments on loans they could have afforded to make because the property had declined in value. Borrowers who were grateful to receive 100% financing and what was perceived at the time to be favorable loan terms were not hesitant to betray the lenders when their speculative investment did not go as planned.

The 30-year fixed-rate conventionally-amortizing mortgage with a reasonable downpayment is the only loan program proven to provide stability in the housing market. Many of the "affordability" products used during the Great Housing Bubble and many of the deviations from traditional underwriting standards created the bubble. Mortgage debt-to-income ratios greater than 28% and total indebtedness greater than 36% have a proven history of default. Despite this fact, debt-to-income ratios greater than 50% were common in the most extreme bubble markets.

Limiting debt-to-income ratios is critical to stopping loan defaults and foreclosures. Lower FICO scores was the hallmark of subprime lending. FICO scores provide a fairly accurate profile of a borrower's willingness and ability to pay their debts as planned. Low FICO scores are synonymous with high default rates. Limiting availability of credit to those with low FICO scores was a historic barrier to home ownership because these people default too much. The free market solved this problem. Subprime was dead.

High combined-loan-to-value (CLTV) lending including 100% financing is also prone to high default rates. In fact, it is more important than FICO score. FICO scores are very good at predicting who will default when down payments are large, but when borrowers have very little of their own money in the transactions, both prime and subprime borrowers defaulted at high rates. Many prime borrowers are more sophisticated financially, and the unscrupulous recognized 100% financing as a perfect too for speculating in the real estate market and passing the risk off to a lender.

The primary culprits that inflated the housing bubble were the negative amortization loan and interest-only loans where lenders qualified buyers on their ability to make only the initial payment. As the Great Housing Bubble began to deflate, Minnesota and some other states passed laws restricting the use of negative amortization loans and required lenders to qualify borrowers based on their ability to make a fully amortized payment. The Minnesota law is a good template for the rest of the nation.

Any proposal to prevent bubbles from reoccurring in the residential real estate market must properly identify the cause, provide a solution that is enforceable, and allow for the unhindered working of the secondary mortgage market. The solutions outlined below are both market-based, meaning it does not require government regulation, and regulatory based, meaning it entails some form of civil or criminal penalties to prevent certain forms of behavior leading to market bubbles.

All changes are difficult to implement and the solutions presented here would be no exception. Any policies which prevent future bubbles will be opposed by those who profit from these activities and homeowners who are in need of the next bubble to get out of the bad deals they entered during the Great Housing Bubble. Despite these difficulties, it is imperative that reform take place, or the country may experience another housing bubble with all the pain and financial hardship it entails.

Housing Bubble Causes - Why Did it Happen?

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QR Code for Real Estate

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You could not know but since ever, I've often been quick to check new advertising ideas as they come out. And since I own codytech.com, it's often been a method to put those ideas on the internet. That was the case when I heard about the QR codes about 2 years ago.

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I read an article on the internet about it and I know they're utilized for literally everything there. You walk within the street, pass by a restaurant and it is possible to see a QR code on the wall, beside the door. You take a picture with you cellphone and you get the menu and pricing on your screen. It's that basic.

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Of course, sky's the limit. It is possible to uncover those code on T-shirt, coffee mugs, and any sales supplies offered, such as Real Estate flyers or enterprise cards.

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Let me give you some suggestions to use them inside your Real Estate career.

1st get that application for your smart phone. They're virtually all totally free to download and totally free to use. They're all offered to use on any smart phone. You will have the ability to uncover a dozen of them just by Googling QR codes app:-)

Then, create your own QR code for whatever you want, whatever it's a phone number, an email or a web site. Personally, I use qrcode.kaywa.com to make them and print them, or copy the image from it.

Secondly, just insert them in each and every piece of advertising you would like to have. Have your web site URL QR code on your flyers and enterprise cards. Print the URL of a specific listing you've and show it on your yard sign. Which will permit possible buyer who pass by to have the pictures of the inside and your details on the spot!

And third, I have experienced a great deal of interest about those QR codes from possible clients. They ask questions and when they get the full picture of it, it turn out to be an enormous listing tool. They see you as a "tech savvy and advanced" Real Estate agent. You'll get the attention of higher end sellers, men and women who are far more into new technologies. Those normally owns higher priced properties.

The cool factor isn't just about showing off. Occasionally it's about showing men and women that you've the capacity to imagine the next generation of real estate technology, that you've what it takes to appeal to the bleeding edge of modern residence shoppers, and-this can't be overlooked-that you're willing to try some thing diverse and pique our quite human curiosity.

So what about those that do not have a QR reader on their phones (the majority of Americans)? Explain it to them on your internet site. Put a URL next to it that corresponds to an area on your web site that discusses QR codes. And, what do you know? You got them to go to your web site, together with your listings, contact info, and all that other killer content you've to capture leads.

QR Code for Real Estate

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Why It's Better To Buy, and Not Rent, Denver Real Estate

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While home ownership in America was once seen as a stabilizing economic force, the housing bubble of the past decade pushed many into mortgages that they couldn't afford when the housing market crashed in 2007. The overleveraging of credit through risky mortgages was seen as a symptom of flawed tax and housing policies, and renting, not buying, is being promoted by some as a safer way to ensure economic stability (1). But the logic behind this new rationale is now flawed, especially in the Front Range where Denver real estate conditions are much improved.

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Denver commercial property was indeed overpriced during the real estate bubble that developed from 2000 to 2007. But as Andy Knudtsen of Economic and Planning Systems, Inc. shows, property prices in the Denver area have actually fallen 12 percent since the bubble burst, stabilizing in March of 2009 (2). This means that consumers looking for Denver homes for sale can now get good deals on properties that feature low, stable prices.

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In fact, the 12 percent average drop in Denver real estate prices was much smaller than in certain areas of the metro area, such as Glendale, where certain Denver condos and apartment prices dropped 33 percent from 2005 to 2010. Often these larger drops in real estate prices were in newer properties and buildings, whose facilities and locations are just as prime now, but whose prices are much more reasonable.

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Of course, for homebuyers who purchased Denver real estate between 2000 and 2007, this means that the price of their Denver property is most likely lower than when they first purchased. For these property owners, there is a silver lining. For starters, rental rates are increasing at a steady pace and vacancy rates are near a 10-year low (2), so there aren't many other options that would be better than their home. Furthermore, foreclosure rates are dropping (3) and the state's population is still increasing by double-digit rates, meaning demand for Denver real estate should return.

For new homeowners not bogged by underwater mortgages, this is a great time to be looking for Denver homes for sale. With Denver property at reduced prices, and many foreclosed houses selling for steep discounts, now is a great time for any Denver homebuyer, whether looking for an investment or a great home to live in. With property values stabilized and the state's population increasing, look for Denver property values to increase in the coming years, keeping Denver real estate as the strong, stabilizing asset it almost always has been.

Why It's Better To Buy, and Not Rent, Denver Real Estate

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Colorado Land For Sale

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Land in Colorado is some of the most beautiful in the world. There are plains and canyons and the mountains are simply breathtaking. In fact, the 30 highest points in the Rocky Mountains lie with in the state. Colorado land for sale includes all these different landscapes.

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Colorado, a state with approximately 5 millions residents, ranks 11th in the nation in per capita personal income at approximately ,000. There is a flat 4.63% income tax regardless of income level. Some of the most notable major corporations in Colorado include Coors beer, Jolly Rancher candy, Celestial Seasoning herbal teas and Qwest communications. The unemployment rate as of April 2010 is at 7.8% which is below the national average at the time.

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Aside from residential properties, there are thousand of listings for Colorado land for sale. There are mountain acreages, miles of flat ranch land, agricultural and industrial vacancies on the market ranging from 00 to over ,000,000. Colorado has maintained its property values in the economic downturn quite well with some areas seeing their values increase while many prices around the US have plummeted. This being said, home prices remain among the highest in the nation with an average listing price being near 0,000. If you're looking for a bargain you might have a hard time finding one in Colorado but that's the price you pay for a little bit of economic stability and the fact that you can live in one of the most scenic states in America.

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Colorado Land For Sale

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Adverse Possession in Colorado - New 2008 Laws Reduce the Abuse

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Adverse Possession is a method to acquire title to land that is owned by another through use. Examples of use might include a fence, driveway, footpath or even a structure being placed on the property of another party. The person claiming ownership must prove the following elements exist in order to have a case:

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o The possession must be OPEN and NOTORIOUS, that is it must be open for all to see. This includes the owner, even if he/she has never actually seen the possession.

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o The possession must be HOSTILE to the actual owner, and must conflict with the owner's rights and interests in the property. The possession must also be EXCLUSIVE in use to the possessor.

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o The possession must be CONTINUOUS and UNINTERRUPTED. For Colorado the statutes specify at least 18 years, and may also be combined with the same possession by a prior owner.

If this all sounds criminal (for some it may be), the legal theory is that by not disputing a neighbor's use of your property by way of a lawsuit, you, as the actual owner have abandoned your rights to the property, either right or wrong.

The Need for Change

A land dispute by two neighbors in Boulder, Colorado in late 2007 that made national headlines and stirred public opinion prompted state legislators to change the law that allowed it to happen. The whole story can be read at the Daily Camera website.

Two State Representatives, Rob Witwer of Evergreen and Ron Tupa of Boulder co-authored a bill to stop what they determined to be outright abuse of the current law. Witwer said "the current law was out of balance and needed to be fixed. It was clear that abuse of adverse possession was much easier in Colorado than in most, if not all jurisdictions."

The New Law

On July 1, 2008 HB 2008-1148 was signed into law by Governor Ritter, and applies to all adverse possession cases following this date.

In addition to the current requirements, the following is also required:

"The person claiming adverse possession had a good faith belief that the person in possession of the property of the owner of record was the actual owner of the property and the belief was reasonable under the particular circumstances."

Also included in the law, judges will have the power to force adverse possessors to pay for the land they do win in court, and to compensate the original owners for back property taxes, and interest.

With the new law the burden of proof will lie with the possessor to prove they have evidence they were the actual owner which should reduce the number of cases appearing before the court. Unfortunately the new law was a little late to apply to the Boulder case.

And, One Other Law-

In the Boulder case, the possessors were a former judge and an attorney. This fact prompted another law to be passed which will restrict judges from hearing cases involving other judges from the same jurisdiction, in an effort to avoid conflicts of interest or the appearance of favoritism.

Submitted by Jerry Hart

Editors note: this article is not meant to provide any legal advice. Always consult an attorney for a particular application.

Jerry is a full time Realtor serving the needs of Buyers and Sellers in the Denver Real Estate market.

Adverse Possession in Colorado - New 2008 Laws Reduce the Abuse

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