If Housing Values Decline? What to Do about Investment Properties

Some economists are now predicting a double dip recession, and a 20% decrease in home values. They are predicting the housing market won’t start improving until 2012. If the worst happens, financially, what is the best thing to do with real estate? Should you try and sell properties now, or hang on to real estate investments until the economy recovers?

Each property and situation is different and there is no way to really predict what will happen. If you know you are going to keep your house or investment properties for a long time, then the decision to hold is obvious. While home values may be down for the next few years, in the long term they will go up. The more important question to ask may be, Is this house suited for my needs? and What is my goal with this investment property?

If you like wherever you currently live, then you ned to remember that the primary purpose of a house is as a shelter. If it’s easy to meet your debt obligations, then wait until the real estate market turns around.

If you make monthly income from your investment real estate, then you already have a good long term investment. Every year you own the property, the earlier you get to actually paying it off. There will always be demand for rentals because everyone needs shelter.

If you currently have negative cash flow, then you’ll probably be better off selling it now. List it now, but price it ahead of the competition so it sells before things get worse. Sell now and get out.. If we’re still two years out before home values start turning around, then it may be half a decade before homes are back to their current values.

Remember, real estate is regional and every market is different. Tremonton Utah Real Estate might see large declines while Redlands California Real Estate might actually increase in value. Economist predictions are not very accurate, and nobody can rally forsee what will happen to real estate in the future.

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