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What does the current real estate market mean for house flippers?

by Jeanette Fisher

Even thought it has slowed, the U.S. 2007 housing market hasn't gone into the swoon predicted by many economists, which is good news for most Americans. The market is still flat and overall home sales haven’t been this slow since back in 1991, but there are signs that lower financing costs and falling prices are beginning to lure buyers back. The overall market is down 8.5% from the previous year, but according to the National Association of Realtors (NAR) index of signed purchase agreements, home sales actually rose .7% in February after declining 4.2% in January.

However, the overall outlook doesn't’t seem to be as bleak as economists predicted, and some areas of the country are increasing slowly, though much of the country continues to be flat or in a slight decline. Around the country, the NAR report showed that pending sales on existing homes increased in the South (4.5%) and Midwest (2.9%) but declined in the West (6%) and Northeast (1.3%). The decline in home prices was most significant in coastal areas, where prices had been increasing at a rate which most economists had said was unsustainable, and it appears that they were correct.

There’s a general agreement that the rapid increase in home prices over the past few years was fueled in significant part by speculation. Investors saw escalating home values, coupled with low interest rates and positive economic conditions, as a way to make a quick profit, sometimes as much as 50% in a single year in some markets as opposed to the national average of 10%. However, those days seem to be over for the foreseeable future, and many investors have begun selling off their properties, causing supply to outstrip demand and forcing prices even lower.

However, there is some good news amid all of the conflicting statistics. First, most economists don’t expect the overall decline in the market to be anywhere near the freefall of the early 80s or 90s. Second, if you’you've been dreaming of being able to buy your own home but have been kept out of the market by the dizzying spiral of rising prices over the past few years, this may be your chance to finally realize your dream.

America’s overall housing market may not have been able to sustain the frenzied pace it had been experiencing, but most economists agree that the current downturn represents a market correction and that homeownership remains a wise choice for most people.

As for house flippers, if you buy low or at wholesale prices, create a buyer's dream home, and sell to a buyer who wants to live in the home, you should be able to make a substantial profit—in any market.

Learn how to fix and flip. Read more about the process at our other website: Flipping Houses.

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One of the Fisher's houses after. Brian added the rockwork and did most of the remodel.

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