THURSDAY, SEPTEMBER 17, 2009

Should I invest in Lake Lanier property NOW or wait

I attended a charity event a couple of weeks ago at a place called
Rancho Los Alamitos. This Rancho was a land grant of over 300,000
acres in 1790 and is now the city of Long Beach and most of Northern
Orange County, California. Learning how this Rancho was developed into
some of the most valuable real estate in the country made me think of
the deep history that our country has in real estate investing,
speculating and development.

In any investment or business it is paramount that you understand the
cycles, and to understand the cycles you must know the history.

So sit back, relax and enjoy a short history lesson on real estate
investing in the United States.

Real estate has always been big business in the United States. After
the Revolutionary War, the federal government began a process where it
transferred one billion acres of land to private owners through land
sales and land grants. In the 1830s, the government sold 20 million
acres for roughly 1.25 per acre. Although this sounds like a bargain
to us today, at the time the vast majority of citizens could not afford
the price. Consequently, a grassroots group called the Free Soil
Movement formed and lobbied the government for an alternate method of
distributing land.

The Homestead Act of 1862 was Congress answer. 160 acres per each
adult in the family was given to settlers who did not already own land.
There was no cash exchange. Instead, the understanding was that the
settlers would live on and improve the land for a period of at least
five years. This program was very successful. In total, the government
distributed over 300 million acres of public property to private
landowners and created the basis for the real estate market.

At the end of the 19th century, America was in transition from an
agricultural society to a manufacturing economy. Citizens flocked to
urban areas to work at the factories. Midwestern industrial center
Chicago, for example, reached a population of one million people
quicker than any other city in history.

The values of urban properties skyrocketed. By 1920, 50 percent of the
American population lived in cities. This density in urban America
created opportunities for real estate development in housing, office
buildings, industrial facilities, hotels and retail centers.

The skyrocketing property values and associated costs began pushing
the people and businesses that could not afford them outside the city.
Developers made these planned communities attractive by building along
the transportation routes so people could easily commute to work in
cities.

Then along came the Great Depression crippling most industries,
including real estate. Values dipped below debt levels, which caused a
collapse. The federal government put the domestic financial markets
through a major overhaul and was shrewd enough to include the real
estate financing market as part of the New Deal programs.

Sound familiar

America and the real estate industry slowly climbed out of the
Depression, but just when things were turning the corner we entered
World War II. Development was put on hold during the war, but this
quickly changed once the GIs returned from overseas and another era of
prosperity began. Virtually overnight there was a tremendous demand
for housing. By 1946, new housing construction quadrupled to over
500,000 homes.

The decade was also a period of expansion for the highways, which
provided access to more areas by car and truck. Consequently, this
enabled all types of real estate (hotels, industrial and retail
centers) to be located further outside the city. The suburb was born.

As the suburbs grew, the cities slumped. By 1960, there were many
urban centers that had not seen new office building development in 30
years.

In the last five decades real estate, spurred on by the growth of the
service industry, the availability of financing and municipal
incentives, is now considered one of the most dynamic sectors in the
American economy. After all, people may divest from their stocks, but
they always need a place to live, work and shop.

I am sure, by reading this short history you can identify some of the
cycles. Can you identify the cycle we are currently in Could you
identify the next part of the cycle and how to profit. We can all
probably name at least half a dozen real estate investors that have
made extraordinary fortunes in this country. Will your name be added
to the list

Teresa Smith

Living On Lake Lanier

Teresa@livingonlakelanier.com

770-654-4173 Mobile