This current talk of financial bailout suggests that as a result mortgage rates will fall allowing a surge in home buying especially for first time buyers.  Still one must wonder how long this will last but also what are the long-term impacts for the housing market?  Right now it feels like the lending industry is distressed but this may not be true for very long.  The banks at risk of failing just need to time to recover and it will actually be consumer confidence that drive the economy back to being fruitful again.

There just seems to be a lot flux in the market, organizations don't know if they are coming or going.  This is a period of acquisition and consolidation.  Lehman Brother's is on the auction block, AIG's failure has brought the issue of bailout into the limelight and Bank of America, of course, will remain standing, buying up new pieces for their vast umbrella like Merrill Lynch.  This week has been historic and shocking for the experts even to say, they don't know what should happen.  That's tough.  While so many people grasp this concept, many are putting their ducks in row and wonder if this is a right time to even think about buying a home or new car.  I believe people are hesitant this week but this will change once there is direction and leadership toward resolution.  This is what some experts have to say about the future of home buying:

How does the latest fallout from Wall Street influence mortgage lending rates?  Well, let's take a look.  We can only hope.  In the interim rates will more than likely go down because there is a lot shuffling going as the dust settles and investors look for safety nets in this uncertain market.  Upon many experts advise, this is a time to put our money in real estate investment or income property.  As of last week the 10-year notes went down which means that the yield also decrease but this makes for new opportunities.  Experts expect mortgage rates to follow this trend because historically they usually follow suit.  Expect rates to drop further as more news brakes.  Just within the last week Bankrate.com commented that the 30-year fixed rate was 5.78% down from 6.08% of the previous week.  Just to compare, this rate was 6.5% in August.

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Understanding the fundamentals of finance known as the time value of money is key in real estate investment. Such causes as inflation make the real value of a dollar less in the future than it is worth now. Because of this principle, buying property outright in cash does have its drawbacks, financially speaking, because another use of that cash may actually benefit the investor in the future more than it would if it was expended in an immediate purchase.

 When an investment is made using funds that have been borrowed, we call this activity leveraging. It is the expressed intent of the investor to make a return on the investment. If a $100,000 property were to appreciate 10% over a 12-month period, its value would be $110,000. The return on investment (ROI) would correspond to its appreciation of 10%, not including the costs of selling the property.

For those investments made with borrowed money, the resulting ROI is actually a much higher percentage of the out-of-pocket investment. Should the investor contribute $10,000 in the purchase of a $100,000 property, and capitalize the remaining $90,000 in financed funds, a 10% increase in the value would still yield an increased equity of $10,000. However, the ROI is 100%, because of its basis on the actual out-of-pocket investment of $10,000 made by the investor. Essentially, the investor doubled his investment! Of course, in financing the remaining $90,000, costs associated with financing interest would diminish the actual yield. As a way of allaying these financing costs, a good strategy would be to rent the property to generate revenue.

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All investors including ones new to the playground know that the "golden grail" to succeeding in the real estate business is location. Location is the alpha and the omega of the real estate world. The common mistake is many assume that high-end prime location property is the be-all to end-all but that is simply not the case. Although those locations are often sought after they are not always the most favorable for an investor. When evaluating a property, the investor needs factor in the property's cabability of producing a high return, regardless of the forecast prediction.

It seems like yesterday that Britney Spears was the hottest thing to hit the music scene & no one could have imagined that her stock a.k.a. her career could have dropped so quickly after riding so high and her oops so far has not been done again. The same falls true for property and the location you purchase it in as well as the potential of what you can do with it. An area can be highly desirable for five years running and just as you decide to zero in on it you notice it is like that slow leak in your tire that took a couple of weeks before it had you parked on the side of the road. It must be determined if the tire is just flat or totally shot as in what is the potential for a property in a location to rebound or will it remain in a lull for a long time to come.

It is very important to understand how critical location is in terms of how it can increase your ability to sell during what seems like an elevator that has a broken "up" button and keeps heading down floor after floor but you know eventually it is going to stop. The great news is that just like that battery that you assumed was dead but starts working like a charm after charging, the value of majority of locations will go up in time.

You don't want to end up like Evander Holyfield with the threat of losing his 54,000 square foot home expressing "I have money but I am not liquid" Whew, that is quite a statement because we know one of the bottom lines is liquidity so when you purchase that property please consider how soon you might see a return on investment, and what you can pull as profit if any when you decide to sell seeing as that your profits for a time will be held in equity. When your profits are tied up in equity, do your best to select property that can meet its forecast, produce ample returns, and provide easy liquidation, regardless of the market condition

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Determining the period of time when house pricing will stabilize in the U.S. can be equated to playing a game of chance in Vegas, and placing $20,000 on Black at a roulette table. While the talking heads with their doctoral degrees may disagree as to when exactly housing markets will stabilize one thing is for sure, sometimes when you are told that the sun will shine, all your given is clouds and rain. This is the dilemma for buyers and sellers in the U.S. housing market. With a changing housing market the need to make informed decisions based on successes, not theories or hunches becomes critical.

Two examples best illustrate the different opinions of respected economists. Crusaders of optimism believe that a rebound of the housing market is within reach, while proponents of methodical thought believe that a recovery could take years to get started. The question for most buyers and sellers remaining is "which stream of thought best suits me, the path of optimism or the trail of history repeating itself?"

Despite the journey potential buyers and sellers may find themselves on, a predicted trend of the housing market and national economy is expected to be soft in the first half of the year with a notable improvement during the second half. However, others have predicted a lengthy period of restructuring and adjustment to housing markets.

Figuring out which school of theory is correct can be equated to picking the winner of a three game series between the Boston Red Sox and New York Yankees. While both teams look good on paper, determining a winner of the series can only be done by looking at the trends of the past and current performance in the year up to this point. The same can be said about housing markets. Both schools of theory can prove to be correct based on the notion that the national housing market is large enough to take into consideration a wide variety of trends in different locations and compare them against one and other.

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There have been huge shifts in the real estate industry in the last few years.  While the market have seen a dramatic downturn, and interest rates have tumbled, sellers and buyers are asking themselves what it all means, especially when it comes to property values.  The topic of "appreciation" is one of particular interest, and I'm not talking about a broker buying you a hand-held vacuum as a gift for purchasing a home from them.  Appreciation is the increase of value to a property for various reasons that can include relative value to surrounding properties, construction and improvements, or any other factor that affects the value positively.

 While it may seem like a cut-and-dry topic, appreciation is actually a clouded subject and can be confusing.  It gets even more confusing when you consider the following claim: properties do not appreciate in value.  Are you confused yet?  Well, let me explain.

Flourishing real estate markets abound, and these markets have a plethora of eager investors.  Some of these same investors are confused and thwarted in making an investment despite the favorable conditions they may have stumbled upon.  And yet, others are finding more opportunities than they could have ever imagined, and are enjoying much growth. 

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