Whether or not the government’s response to the financial crisis and the recession was appropriate, one thing is pretty much certain: with the federal deficit at a record high and showing no signs of decelerating, the Treasury will have to print a lot of dollars to make good on those debts, inevitably putting downward pressure on the dollar and leading to inflation.
These conditions are significant and create a one-in-a-lifetime opportunity for real estate buyers and investors. Those who buy condos at condo auctions will benefit – even through a protracted recession – in a number of ways.
First, buying at auction provides buyers the opportunity to buy properties for well below even current market values, giving them a substantial cushion on their investment. Next, the historically low interest rates employed by the Fed as a response to the recession has created cheap money for those with good credit and good jobs with which to buy assets.
When inflation is finally realized and the dollar weakens as bills roll off the press, today’s buyers will be rewarded with an asset that will appreciate as foreign investors seek investments and second and third resident’s in our country’s desirable urban markets – a trend that was observed during the last housing boom. In addition, a protracted recession and increased unemployment will force more Americans to rent in the near-term, especially in job-creating urban markets.
With rental yields on urban properties at near-record lows, there is little downside risk to rental rates and a very bullish case to be made for rent increases – increases that translate into higher yields and much higher returns on an a good investment.
Signs of a bottom in housing are beginning to emerge. New home sales are up for the last three months. Prices have increased in urban markets. And major housing economists have turned bullish. Once the evidence is too compelling, the opportunity to buy great properties at steep discounts at condo auctions will have passed. Those who are most handsomely rewarded will be rewarded for taking risks before the rest of the herd.
Buying at auction is easier than most would imagine. A list of properties is usually published well in advance and open houses are held so that bidders can inspect the properties first-hand. When an auction date is set, bidders can place maximum bids so that they need not bid live, or bid live in person or online (depending on whether the auction is live or online).
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