"Real Estate Resurrection Begins in California" from Forbes.com on Jan 8, 2009. "U.S. Treasury May Look to Take Rates down to 4.5%"

"In some of the hardest-hit areas, like California, Florida and Nevada, sales in some areas have been rising in recent months..."

I admit, this is an optimistic article. There are just as many articles that are saying 2009 will be another very depressing year. I will update my blog weekly, and will try to be as even handed as possible about including real estate articles from both perspectives, and most importantly, passing along relevant statistics for the Los Angeles Market.

FYI, this article is in line with what I'm seeing so far this year. My current clients as well as the buyers I meet out in the field, all seem to be of the mindset that 2008 was their time to wait, but now that the new year (2009) is here, they want to be more aggressive about finding something.

-Jerry

Real Estate Resurrection Begins
Hugh Bromma, Entrust Group, 01.08.09, 03:45 PM EST
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While the data on prices and sales are still awful on a nationwide basis, there are rays of hope emerging for real estate.

Sales of new and existing homes continue to decline in the U.S., as assets of all stripes are re-priced lower and consumers become more risk averse. But the news in real estate is not all bad, and in some of the hardest-hit areas, like California, Florida and Nevada, sales in some areas have been rising in recent months.

While the national real estate figures show the country continues to be mired in a downturn that started more than two years ago, there are increasingly pockets of hope out there. It's true that much of the recent uptick in real estate activity reflects distressed sales, such as foreclosures. But the fact is that drastically lower home prices and more attractive mortgage rates--rates are down almost a full percentage point on a 30-year loan--are creating more buying interest, especially in the areas that have been hurt the most.

In fact, October existing-home sales surged more than 37% in the West, primarily because of the rise in sales in California and Nevada. And in Florida, existing-home sales jumped 15%, the second straight month of rising sales in the Sunshine State. Meanwhile, mortgage applications more than doubled during the week of Thanksgiving because of the rapid decline in rates.

Adding to the budding sense of optimism are reports that the U.S. Treasury will look to take mortgage rates all the way down to 4.5%, which would provide a huge boost to would-be home buyers across the country. Of course, real estate, even more than politics, is all about understanding the local area, which is precisely where astute investors are finding extraordinary opportunities.

Experienced real estate investors who have been able to keep some powder dry and understand their local markets are now able to buy properties for 50 cents on the dollar, or even less than just a year ago. In many cases, these are the kind of prices that represent once-in-a-lifetime opportunities, where the downside is now very limited and the upside is incredibly compelling.
Comment On This Story

One of the keys to finding a great real estate investment is understanding the importance of cash flow. We recently had a client utilize his self-directed IRA to purchase a brand new property just outside of Los Angeles. The property, a three-bedroom, two-bath single family home, was purchased for about $150,000, half what the exact same home would have cost a year earlier.

The purchaser had about $60,000 in the IRA and put down about 30% of the purchase price, making his monthly mortgage payment approximately $1,100 per month. In this area, similar properties rent for at least $1,400, so the property should have no problem showing positive cash flow right from the start. In addition, if there is a pick-up in the real estate market, the purchaser should be able to sell it outright for a handsome profit.

This is the kind of activity we are seeing more of in what were the hardest-hit areas. The key, of course, is having available cash--if you're buying real estate in a self-directed retirement account, you will need to put down 30% of the purchase price--and understanding the unique dynamics of the market you are buying in.
Dugg on Forbes.com

As a large administrator of self-directed IRAs, we've witnessed thousands of investors use their self-directed retirement plans to buy properties and realize excellent returns by selling them at a later date or renting them and allowing them to cash flow, as discussed earlier.

If you do decide to explore some of the more downtrodden areas, do your due diligence and understand the market in which you plan to invest. How is the local job market there? How has the area done in previous economic downturns? There's no substitute for knowing your market and doing your homework.