Statement from Greg: “I think that this overall sentiment on real estate that the bubble is bursting and investors should get out is wrong and that, in fact, right now is the best opportunity for real estate investors in the last 15 years.”

Greg is available to talk with you about this; some possible questions follow:

Q and A with Greg Warr

Q. With the stock market rallying and housing starts down nearly 20%, what do you see ahead for the real estate market?

A. In actual fact, the housing starts statistic is a lagging indicator from about 6 months ago and, with interest rates down, now is a great opportunity for real estate investors. And with the Fed raising interest rates, this will continue the slow-down, but remember that these raises are only for the short term. You have to look at 30-year bond rates where mortgage rates are tied and you will see that these rates haven’t changed in many years.

Q. But can real estate continue to go up forever?

A. No, of course not, there will be a slow-down eventually, but not for 18 to 24 months, making right now a great opportunity for both home buyers and investors. The threat of changing interest rates is making people panic and when people panic there is always more opportunity for those of us who don’t do so. This is a great time to lock in interest rates. You should look for properties that have been on the market for a while and be ready to make deals quickly because others are panicking

Wall Street is going to hedge the money they lend and keep mortgages low. The next 6 to 9 months will be a great time for real estate investment. We have an inverted yield curve with short term funds going up and all those lenders that were trying to do 10-year mortgages facing this fact, while 30-year rates have stayed the same.

Q. If you think real estate is coming down in 18-24 months, shouldn’t we be getting into stocks?

A. As both a professional trader and a real estate investor, I can see that we currently have things backwards in that we are being told to hold stocks for the long term and people are flipping real estate, buying and selling short term. Stocks work in an efficient market and should be short term and since real estate has a built-in appreciation factor, it should be held long term.

When people are buying houses, rents go down. In 18 months, when the bubble does burst, people won’t be able to buy and will rent instead, with rents therefore going up. This is why real estate is a good long term investment.

Q. We talked about stocks. What do you think about inflation?

A. The run-up in fuel prices has been typical of the summer months, though it has been blown out of proportion. Although fuel is still relatively high, with oil prices coming down, building costs will come down which will increase building and housing starts, resulting in more employment and more investment. Inflation should stay at bay.