I was at my local REIA (real estate investors assocation) meeting last night and we were talking a bout foreclosure.

Mike Jacka, the host of the meeting showed this video below and I thought it was very thought provoking. My comments are below after you watch the video.

Charles Dickens’ “A Tale of of Two Cities” compared the fortunes of two protagonists who lived in Paris and London during the French Revolution. Paris was in a mob rule - full of chaos. Much like our foreclosure market. Then, there is London, repressed and quiet somewhat oblivious of what is going on in the other city.

In first housing marketing, many buyers/sellers find themselves in a deflationary reality where their home values, their neighbors home prices, and interest rates are dropping almost daily. REOs, short sale, foreclosures are all pulling the market down at a steady pace. This video talks about the affordability index. When affordability is at it’s lowest, it marks the peak in house prices, with a decline sure to follow. We’re now approaching unprecedented affordability index. The video stated the median income is 202% of what’s necessary to qualify for the median priced home. That means on average Minnesota’s make twice as much to qualify for our housing stock. Now is the time to upgrade and move up. If your thinking about buying, now is the time.

However, as an investment group, we are still seeing prices in a deflationary cycle. Therefore, we are trying to unload everything new we buy. We are not holding, unless it’s a can’t loose situation. The mobsters are the lenders and the government. However, things are soon to change.

The second market is one of inflationary price values. Inflation is bad - right? We’ve all learned that. How about hyper-inflation? This new “second” market will drive up prices once the built-in inflationary machine from the government begins gaining momentum. You think $4 gas was bad? Wait until you see $8 gas. Once we perceive prices going up, we will stop selling and spend as much of that cash that we’ve still got on more houses. We’ll let inflation drive up the prices while we rent them watching the prices go up and our rents increase.

stay tuned for more tips.