After more than a year of dire times in the real estate market, there is some good news: the bottom is in sight. “Good” is, of course, a relative term. Compared to month after month of declining values, foreclosures, and tight credit the prospect of flattening out the steep curve is as good as the news is going to get in the near future.

The actual bottom of the real estate crash won’t be clearly defined until it has already passed and we see upward movement. There are signs, however, for those willing to look, that indicate the bottom is near. Just as circling vultures in the desert indicate the presence of a dead or dying animal, vultures entering the market indicate that we are nearing the bottom of the trough.

“Vultures” in the world of real estate are the investors who come out of the woodwork when prices drop to about thirty cents on the dollar. At that rate, the vultures believe that they can purchase real estate from distressed owners and make a huge killing within a reasonable holding period. Based on the transactions that I’ve seen popping up in the last month or so, I believe that the vultures are about to come out in force.

Although “vulture” might seem like a derogatory term (I didn’t make it up), vultures are not necessarily bad for the market. In fact, it is precisely the involvement of these new investors that will re-start the market. Vultures recognize the point at which the market is so low that the return they will make in real estate is greater than their other options. When the vultures pull their money from other investment vehicles and move it into real estate, it signals the end of the downward slide.

I don’t know how long we have before we begin to see significant upward motion. The definition of a “reasonable holding period” has been reset somewhat by the historic plunge in value in recent years. It still looks to be a long haul until market equilibrium is restored, but at last there is a sign of hope for a turnaround to begin in the not-so-distant future.

Tweet This Post