Everyone is getting into RE game. Again.

[George P.]

Of all my acquaintances most of people are looking into buying a rental property.
These are same people that were laughing from the idea of owning investment real estate. 30 (+/-5) years old group with stable income. But with no understanding of how and why. The notion is "Let's buy while it's so cheap and hold long term". Now mind it, they are looking to buy in (still) expensive areas where the property won't cash flow.

Anybody else is witnessing similar trends?

[Joseph M.]

Interesting , I do see people getting into the real estate market and interested in getting into the market , but it seems more people are using cash nowadays. Buying a rental property with negative cash flow is not a smart move in any market . If they are buying property that cash flows right now it would be a smart move especially in areas that are way below their peak prices.

I just heard mitt Romney say something regarding the foreclosure crisis that we shouldn't be holding back foreclosures but let the process continue and let the market bottom out and let INVESTORS purchase properties and prices will rise. This makes logically sense..especially if it was combined with sensible loans for investors. From what I have seen and heard on this board and elsewhere getting a loan even on a property that cash flows is very difficult.

But from the standpoint of someone that would want to get their ducks in a row regarding cash and lining up financing it's better for the "foreclosure crisis " to continue as it keeps prices down. Once prices rise, rents will not rise at the same speed . This equals less cash flow for buy and hold investors .

I still don't really see that everyone is getting into the re game as they were during the boom years. This is probably because of a combination of fear and the lack of easy financing. Once the fear is gone and the market starts to rise, I believe it will not rise slowly as many forecast . Look at the stock market from the low . Within less than two years many stocks I was watching went up much more than 200 percent . Early 2009 the Dow was at about 6500 today it is over 12000. Markets can move quickly in a relatively short period .

If the real estate markets began going up right now it's not unreasonable to think it would be 25percent or higher in a year or two. This would be unreasonable in a market without foreclosures. Eventually these foreclosures will be worked out of the system aka supply will be down. Of course then it will be the beginning of another bubble ..but those that bought properties at the low could take advantage of it by selling for huge profits.