Hi Friends,
Went to the Inland Empire’s meeting last night and saw Bruce Norris. Had to be 300 people at least – standing room only.
So what did he say? Let me summarize…
Even though I thought I had a handle on this market, Bruce shook me with the numbers. The avalanche of foreclosures is just beginning to hit, and not even near what it will be later in the year. Prices will continue to drop steeply until a majority of the inventory is priced at break even or cash flow levels. The correction that took 7 years in the mid-late ‘90s is occurring in less than 2 years this time. He admits frankly that the downward momentum of the market has caught even he off guard and he is very cautious about buying for flipping, as you can get caught chasing the market down.
Some of the scariest numbers are the supply vs. demand ones. Demand in the state this year will be around 300k units. Supply from REO’s alone will be 325k min. So even if you think you have equity now, as the REO’s take over the market and compete for buyers (by driving prices down). Equity will evaporate. OUCH!
REO brokers whom are struggling to handle 500 listings will be inundated with as many as 2000 in the next couple of months!
OK, so now that you are ready to run for the hills – what is the good news? Well, short sales are going to dominate. Lenders will be very negotiable with REO’s, so make offers! Do your homework “Bruce” style, and you will make a ton of money. Line up your team – Hard Money, Real Estate Broker, Attorney, Escrow and Title, Marketing, and Therapist.
One additional, essential team member you should have is a mentor (call it teacher, Guru, coach, etc). Unless you have dedicated yourself like Bruce (or me) to staying on top of this market, you can get burned. Call me anytime if you want to talk. But you may have to leave a message as I’ll be out driving REO’s…
Rich
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