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From: http://money.cnn.com/2006/08/23/news/economy/homesales/index.htm

Home sales slump deepens
Sales of existing homes slow more than expected in July as supply of homes on the market continues to climb and prices soften.
August 23 2006: 10:08 AM EDT

NEW YORK (CNNMoney.com) -- Home sales slowed further in July, according to a trade group reading Wednesday that showed the closely watched real estate market to be even weaker than Wall Street expectations.

The National Association of Realtors reported that existing homes sold at an annual pace of 6.33 million in July, down from the 6.6 million pace in June, which was also revised lower. Economists surveyed by Briefing.com had forecast a 6.55 million pace.

The group said that there was a 7.3 month supply of homes on the market, as all regions of the country outside of the South saw a year-over-year decline in median home prices.

Nationwide median home prices are up just less than 1 percent compared to July 2005, after years of double-digit price increases.

I posted this list earlier, and will repost it here.

http://money.cnn.com/2006/08/15/real_estate/metro_prices_table/index.htm

Home prices in various metropolitan areas for the 2nd quarter -- there are still some double digit growth markets, but if you look at the overall, growth is small or non-existent (the midwest is pricing at 2% lower since last year).

http://money.cnn.com/2006/08/15/real_estate/metro_prices_table/index.htm

What does this mean, especially coming from me? My record has been pretty clear. Since joining this forum I have been very bearish on residential real estate investments, and I remain that way. However, in looking at some of the top growth markets, I am coming to the belief that there are some markets that are bound to go up. It is just a matter of finding them. Prices are relatively low and may have some time to go before they max out. However, for every area there is a ceiling. When prices hit, they tend to drop quickly. I would also question what inventories are like, and if they indicate that while some houses are selling for greater amounts, others aren't selling at all.

The caution that I would raise here is that house prices need to be in line with salaries. The investor who plans to purchase a house and flip it needs to see what the average salary is before figuring out what the price point for the house will be.

Wolf:

It has nothing to do with your original question, it was just an observation on my part.

If your advisor works for a major firm, then he should have colleagues in the office. Ask if any of them work in REI. Or he might have another client who works in the area.

Flipping houses is the new big fad. Everyone is getting into it. Everyone sees a lot of money in it. Here's the problem -- there is a limited amount of money to be made. The more people in it, the less money available for each person.

DUE DILIGENCE DUE DILIGENCE DUE DILIGENCE DUE DILIGENCE

A market analysis means you look at rents, occupancy rates, employment rates and whether people are moving into the community or moving out. Market analysis is all about due diligence. It's a lot more complex than just calling other properties for rent and asking how much they charge.

-Justin

I won't discuss the value of using a financial advisor or not, but I will say this. If you are hiring this person to advise you, then you should consider his advice.

Also, consider commercial real estate. Look into TICs, and you might find his reaction warming up. Also, it might prove to be a safer investment, with more income coming in.

Alternatively, look into REITs. Same deal as above.

I am not a big fan of residential real estate investments right now. I don't like the market, and I think things are really going to just get worse before they get better. Rents are going up in apartment buildings and complexes, but house rents are going to have to stay high to cover mortgages. All in all, the residential market just looks like it's going to be ugly for a couple of years.

All that being said, they aren't making any more land. House prices will go up again. It's just how much of an up and down are you willing to risk.

-Justin

I have a question for a commercial lender. Basically, I need to know about fee inflation.

If someone can contact me at [email protected] or 609-919-1895 I would appreciate it.

-Justin

Greetings.

I am looking for a couple of tax professionals to answer a few questions about real estate tax due diligence. If you are available, please let me know how to contact you.

Much obliged.

-Justin

Greetings all,

I am new to these forums, and thought I would introduce myself.

My name is Justin, and I work for IncreMental Advantage. We are a think tank located in Princeton, NJ. I am a research analyst working in real estate, with a focus on due diligence best practices. That said, I also cover most of the globe when it comes to doing work in the field.

I look forward to getting to know everyone and being as much of a resource as possible.

Cheers,
Justin