Most of us remember the great recession of 2008. It was a time with much uncertainty, especially in regards to the real estate industry. We have come a long way since that time but it was such a big hit to our economy and to the real estate market. The great recession affected us all whether we like it or not. In what ways did the great recession of 2008 affect you the most? I know it affected me in huge ways. My wife and I were about to buy a house around may of 2008 but then the market started tanking so we backed out of buying a home. We waited a year to buy a home at the same price point that we were originally looking at but the type of home and area was completely different. It also affected me in other negative ways but I was able to find something good out of the economy breakdown. Let's move on from the past though and talk about today.
Currently, foreclosures in the United States are at a much higher rate than the historical normal, roughly 3 percent higher than the historical average. The bad news is that this means that our economy and more specifically the real estate market hasn't recovered to its historical norm. What good news can we come up with? It may mean that prices are still pretty good, especially if you are getting one that is a foreclosure.
While historically foreclosures are still at a much higher rate we are seeing some good data. Year over year the foreclosure rate is down roughly 33%. In 2013 the foreclosure rate was roughly 2.4% and for 2014 it is 1.6%. So it is currently on the decline. How long has it been on the decline? It has been on the decline for around 34 months. The rate of decline depends on the state that you live in. Utah and Idaho experienced the largest decline of 46% while other states like the District of Columbia's decline was only 2.5% and Wyoming's was 13.4%.
What does this mean for a self directed real estate IRA? It means that if you are planning to buy real estate in your IRA you may have missed some of the best prices around. The real estate economy is on the rise but we still are not out of the woods. Since the foreclosure rate is still 3 times higher than the historical norm the we still have some improving to do. We also are likely to see prices increase if the foreclosure rate continues to drop like it has for the past 34 months.
If you are currently looking to buy it may be a great opportunity for you right now as prices appear to be headed up and one of the best ways to purchase real estate is through your IRA as this gives you tax benefits.
If you are curious about how to invest in real estate with your IRA contact us today.
Author: Nick Barker