The city of Cleveland, located right in the center of the midwest “rust belt”, was hit very hard by the housing crisis. Entire suburban neighborhoods are now ghost towns, with boarded up, decaying once-pricey homes littering upscale outlying areas while the few people who have managed to hang on cannot sell their own homes at any price.
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Having spent six weeks looking at foreclosures in the United States, I have decided to wait a while before investing heavily. This crisis has not yet run it’s course and I feel there are more casualties to come.
What are FSBO homes, and can you really make money flipping them? First some definitions. “Flipping” refers to buying and selling real estate for a profit over a short period of time. Some “flippers” are looking only to make money from buying low and reselling quickly, while others repair and improve or otherwise add value to the property before selling it – an important distinction we’ll get back to in a moment.
The US housing market is in dire straights, no one could argue with that. House prices are down, house sales are down and developers are cutting prices on new developments left, right and center. But where does that leave the homeowner who needs to sell, whether from financial difficulties or some other reason?
Quite apart from the small investors and home owners, it appears that some of the big boys are taking a hit or two in the sub prime crisis as well.
It’s unlikely that the chairman of Citigroup or Morgan Stanley will have their houses foreclosed upon, but, in a sick way, it’s nice to know the banks have been caught with their pants down as it were. According to Mike Mayo of Deutsch Bank, Morgan Stanley will be writing off $3 to $5 billion this coming quarter.
The fed rate cut of one quarter of one percent this afternoon is the big news of the moment, but ¼ % hardly seems worth the effort. The Federal Reserve Board lowered the cost of borrowing Wednesday with a quarter-point drop in rates in hopes of energizing an economy troubled by a sagging housing market and soaring oil prices.
When people talk real estate these days, there’s a whole bunch of ominous terms being bandied about. With some northern US states hit so hard by the housing downturn that over 30% of their houses are empty, and south Florida leading the state , if not the country in foreclosures, the increase in anxiety is to be expected. But homeowners need not panic, there are alternatives to foreclosure.
