Ken Williams' success tips

Is Real Estate Boom or Bust? Who Really Cares? Part 2 of 4

In my local market in the Washington DC metropolitan area we’ve seen prices dip by 10 to 20 percent in some areas.

What’s happening is the market is adjusting from what was a feeding frenzy the past few years driven mostly by aggressive, uniformed speculators. These were the “day traders” of real estate who only came around when they smelled the opportunity to make a quick buck. As such many over paid for properties with the continued expectation of monthly appreciation.

Others placed deposits on preconstruction deals and are now pulling out of their contracts, even walking away from huge deposits. Estimated to represent 30 percent of buyers in some markets, these speculators caused a false sense of market strength, faking out builders who set out to supply more inventory for the mad rush.

Unfortunately this type of investor also faked out the consumer buyer who felt forced to keep pace with the rushing waters of the market or risk getting whisked out of the game. I’m not complaining here, because you better believe I benefited from the buying frenzy as a wholesaler and rehabber, sometimes beyond my own comprehension.

What’s left now is what we’re seeing today, which is a more realistic sales market. Instead of a property receiving multiple bids over asking price within hours of its listing going public, we’re now seeing properties sitting on the market an average 60 to 70 days before receiving any attention.

Stay tuned for Part 3....