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2011 Real Estate and Income Property Forecast

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For any income property investor, it is important to keep updated on the current state of the real estate market so you know when to get in the game versus when to sit on the sidelines. In this spirit, here is a snapshot of what industry pundits expect for 2011.

As you might imagine, 2011 is expected to look a lot like 2010.  Mortgage rates are still at historically low levels, supply is very high, and prices are in bargain territory. 

The supply of properties now hitting the market is particularly troublesome, because the reported numbers do not reflect the so-called shadow inventory.  Shadow inventory consists of properties currently going through the foreclosure process that have not yet hit the market.  Because this inventory is not yet reflected in the industry numbers, the supply is even higher than what can be measured. 

Aside from this unusually high supply of properties, the housing market in general is intricately tied to the economy as a whole.  In fact this is what created the shadow inventory, as the high levels of unemployment and similar economic distress seen over the past 2-3 years caused a spike in foreclosures.  The good news is that the US economy is expected to improve in 2011, and therefore some analysts are anticipating a slight increase in housing demand and prices this year.  Of course, this assumes that the real estate market has already bottomed out, which remains to be seen.

What this all means for the investment property seeker is simple: prices are low and bargains abound.  Thus, from a pure price perspective, if you want to buy investment properties, and you have a long term strategy, now is the time.  Although this is still not a great time to flip houses, if you plan to hold and rent out the property for at least several years, you should be good to go.

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