Due to the current conditions of scarcity of credit to the real estate in the U.S., along with the deterioration of the credit rating of individuals based on personal debt and incobrablilidad increased , prices have leveled properties strongly downward . The chances of acquiring properties at discounted prices are very attractive as an alternative investment due to two factors. The possibility of generating cash flow at higher rates than bank loans and high appreciation potential and the resulting capital gain.
The fall in average house prices in the United States, has led to a proliferation of properties for sale that exceeds the qualified demand to acquire them. This des balance supply and has put sellers under duress forced sales , particularly those with mortgage debt with variable interest rates . Many of these properties have been auctioned by creditors to lower values at acquisition as mortgages typically give values of between 50 to 70 percent of the price.
Creditors once in control of these properties have the sole purpose of recovering their capital and in many cases prefer to take additional discounts to avoid maintaining portfolios of numerous vacant properties , generating maintenance costs and loss of additional value.
The consequence of this dynamic has been the devaluation of property, the limited availability of loans for purchase of residential housing and general caution of investors in the residential area .
Historically, the U.S. housing market has been characterized by cycles of expansion and contraction in which the volume of transactions decreases, when investors are pessimistic about the ability of financial return on investment. But in the long term measured and nationally , rising real estate prices in the last 150 years has averaged 5% annually .
Upon completion of the contraction , and that the market has ” bottomed out ” , slowly begins a new cycle of expansion and strengthening based on the expectations of return, via the strong appreciation that comes from buying at a discount . When the expansion cycle becomes visible property values level off and then begin to rise again giving way to the “speculation” .
We are in the middle of the contraction , where the opportunity to make future earnings is more clear than ever. From there the historic opportunity to allocate a portion of the portfolio of any sophisticated investor , investment in real estate. The properties beyond the return offer other benefits , such as the existence of a real asset to support investment or device fact serve as a hedge against inflation and automatically adjusting inflationary environment .