By:Dennis Norman
Today the US Department of Commerce released a report on new residential construction for November 2008. Like so many real estate-related reports we are seeing today it was not pretty. The report,a joint release of the US Census Bureau and the US Department of Housing and Urban Development says building permits for new homes in November 2008 have decreased almost 50% from the same time last year. The report goes on to state that housing starts have dropped almost 50% in the past year as well.
Since part of the problem in the current real estate market is too much inventory this is good news. There is no point in increasing inventory when there are already too many homes in the market. The law of supply and demand always prevails. Presently we have too much supply for the demand.
So what does this mean for you as a real estate investor? For starters,I think homes for rent or lease are going to continue to be in high demand. As more and more people lose the abiltiy to obtain mortgages as a result of the current credit markets,the elimination of the sub-prime market and the increased foreclosure rate,the demand for rental housing increases.
This coupled with the fact that housing prices are down and there are a record number of REO’s and foreclosures in most markets means that you,as an investor,should have the “pick of the crop”for rental property and if you can be patient,you will be rewarded when the real estate market returns to “normal”in the next 3 to 5 years.
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