Housing poised for recovery

Marketplace: Housing poised for recovery
Saturday, March 14 5:15 p.m.
BY JULIA ANDERSON,COLUMBIAN BUSINESS EDITOR
Julia Anderson
Scott Mikel

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Two longtime Clark County housing industry professionals — one on the construction side of the business, the other on the selling side — see reasons why our housing market is poised for some sort of recovery.Builder Jon Girod of Quail Homes in Vancouver said last week that his company has seen an increase in first-time home buyer activity in the $180,000 to $280,000 price range."Prices have come down enough that our research shows about 19 percent of area households can again afford to buy a home," Girod said. "That has been about the average for the past 20 years. With the $8,000 Obama tax credit to first-time buyers, home construction well below averages and (federal) bailout money in the pipeline, it looks like home building and sales might improve."Girod’s graphs show that housing starts spike after big downturns such as the one we are experiencing. He expects that to happen again."At the end of 2008, we saw home sales increase in six states including California," he said. "We tend to follow." He sees inventory and prices stabilizing and buyer interest improving. "Home prices here increased at an average rate of 8 percent a year from 2000 to 2008," he said. "That is twice as fast as the average increase of the 10 years from 1990 to 2000. The market had to have a correction of about 25 percent to get back to the average. That’s about what we’ve had."In the past year, the median price of houses sold in Clark County has dropped 8 percent to $239,000. But in upper-end categories — $500,000 and above — there have been more dramatic price declines.Meanwhile, Clark County Realtor Scott Mikel also has been tracking data that give him hope for recovery.Mikel looks at pending home sales, where a buyer has officially made an offer on a house. He compares pending sales to the total number of houses for sale in the market. A year ago, the ratio was heading into deep negative territory; this year the market seems to be clawing its way back.Mikel said Clark County housing hit bottom in July 2008 when more than 5,400 houses were for sale here. That total has dropped to 4,180. "Yes, there are a lot of foreclosures and yes, some people have pulled their homes off the market," he said. "But if we get below 4,000 that will take us back to 2007."Pending sales grew by 11 percent in February and closed sales increased by 10 percent from January, according to the RMLS multiple listing service in Portland."Since a large part of the economy is driven by consumer confidence and attitude, I think we are missing an important component if we just report the transfer of title that is often old news and not people’s ‘intent to purchase,’ which is in many ways a better indicator of current confidence," Mikel said.Both Girod and Mikel have been in the business a long time and use numbers, not emotion, to plan strategy. Both see a housing recovery on the horizon.

The Time to Invest In Real Estate is Now!

March 12, 2009
'The' Time to Invest in Real Estate is Now

by Peter L. Mosca
Note: To follow is an excerpt of an interview with Marc Stephan Garrison, founder of the National Association of Real Estate Investors, and author of several books on real estate investing including "Unlimited Real Estate Profit." To listen to the show archive or download an MP3, go to www.IncomePropertyInvestmentTalk.com/021809.
Mosca: What is happening in America today as it relates to real estate and real estate investing from both a residential and a commercial side?
Garrison: All real estate exists in one of four-cycle stages and that would be Expansion, Equilibrium, Decline, and Absorption. I invest, and take investor clients, into absorption markets. On Saturday, I will be flying to an absorption market where there are new jobs that justify construction, and will provide a positive cash flow from day one. Every single listener right now can get involved in these absorption markets. There are dozens of them in the United States. The key is due diligence. In fact, I am looking for new markets to go into in May. I have a rule: I go out with investors four times a year and only go into the very best markets. It is no different than what Mike Anderson and Nathan Hanks have been doing at RealSource since 1989. They do the due diligence, they discover markets, and they take advantage of the opportunities in markets. For example, this coming Saturday I will spend a week in a market with a group of 25 investors and these people will buy about $23 million worth of real estate. I have a whole group of investors that I have taught that have become self-made real estate millionaires because of our conversations and because of our buying tours. Those people will actually volunteer time to help your listeners do the same without a charge. RealSource offers your listeners a free consultation with its Client Advisors by going to Income Property Investment Talk dot com, and that’s what I believe in. I have some of the very best mentors. They are not selling anything. They are not trying to get your money. They just want to help. Bottom line: Whatever stage you’re in; there is a way to invest.
Mosca: What is your take on independence versus relying on relationships or is there a combination of both that works well for investors?
Garrison: You cannot do this on your own. You absolutely have to have a mentor. I know it because that is what I experienced. I had a mentor. People can contact you and if they're interested I can get a phone number and I will outbound a call to you, the listener. You just can’t do it on your own. We’ve been doing market tours for 22 years. We start on a Sunday with a meet and greet. Monday is an all-day class session. We go out on a bus looking at the investment properties on Tuesday and Wednesday. We furnish the demographics, the market, the deals, and the mentors. I cannot emphasize more the importance of having a mentor. If you're not in a position to put up a lot of money to invest in a partnership with RealSource, I can present to you two or three investment properties that will give you positive cash flow every single month from day one.
Mosca: I agree. The mantra in real estate -- location, location, location – has a great deal to do with success. How important is understanding migration patterns?
Garrison: You have to understand the cycle stage for the market that you want to invest in. Then, once you know the cycle stage, you need to use the tools that teach you how to invest profitably in that particular market. My Web site at NAREI.com, and my latest book, Unlimited Real Estate Profit, can help you better understand the fifth migration and why people are moving. People are moving for survival; so they can have jobs. In the market that I am going to this coming Saturday they have about 37,000 new jobs moving into that city. For every new professional job that moves in, there is an ancillary effect. That ripple effect is basically one new professional job equals 4.2 service sector jobs.
Mosca: I urge caution when I hear the word "bargain." There are opportunities out there, but just because prices may be down, that does not equate necessarily to a bargain or a great place to invest. Correct?
Garrison: Absolutely right. You can’t make the market change. The bottom line is you cannot just invest in real estate in your backyard. Your own residence is not an investment it is a place that you're going to be able to live when you retire. Your goal through real estate would be able to generate profit, flipping properties, buying short sales, and buying foreclosures in markets that are advancing, these absorption markets that are moving back into expansion.
Mosca: The top three foreclosure markets -- California, Arizona, and Florida -- have shown signs of slowing down. While still above national average norms the number of foreclosures has been slowing in those three states. Do you think that this is a blip or do you think maybe the enthusiasm and the excitement behind the new president, his administration and his policies might be having a positive effect on real estate?
Garrison: I absolutely believe there is a change in the climate in Washington, DC. I view it as positive for us as real estate investors. All markets will be touched.
Mosca: What is your golden nugget?
Garrison: Since 1985, I have taught thousands of investors on my buying tours and every one of my students, ‘live where you want to live, but invest only where it makes financial sense.’