Why You Should Buy The "Worst" Housing Market Ever

AmericanMonetaryAssociation.orgMaybe it's the worst housing market ever. Maybe it's not. That particular argument is not even worth the breath it takes to engage in it. Who cares if it's the worst or second worst or only in the top ten? What matters is it's a bad housing market. Very, very bad if you're a builder or one of the millions of Americans who watched their personal American Dream go up in smoke thanks to a foreclosure. The point is that if you are a cash investor or can even pony up the 20 percent down payment for a mortgage, it's buyer time, baby.

Keep this in mind. No one can pick absolute market bottoms with any sort of accuracy. They might hit it right once or twice by guessing, make a million pointing out how prescient (lucky) they were at five-thousand-dollar-a-head seminars, then coast to the Bahamas for the rest of their natural lives, but what good does that do you? None.

Instead of trying to pick an absolute housing market bottom, let's look at this logically. First of all, remember that there is no housing market. Not in a broad, national sense anyway. Instead we have dozens of macro housing markets and hundreds of micro housing markets, each rating according to a set of local economic factors that unfold almost entirely independent of the rest of state or nation. So the first key is to know the local market you want to invest in. Intimately.

Now let's look to the places that were hit hardest first which, for the purposes of this article, means the Sun Belt – Florida, Arizona, California, and Nevada. For our money, we'd still stay away from California because that place has problems that go far beyond simple housing market economics. But Florida and Arizona were hit hard and early, so history tells us they should be the first to recover. Let's get that gray matter of yours into gear and take a wild guess at the locations you should be watching if you want to get in on the property deals after the bloodbath.

Here's what we think. The bleeding has almost stopped in many towns in the Sun Belt. Now would not be a bad time to think about investing in the “worst” housing market ever. And do it quick, before the amount of down payment required for a mortgage loan goes up again.

The American Monetary Association Team

American Monetary Association

Flickr / dandeluca

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