Earlier this month the International Monetary Fund said the worldwide losses resulting from the US subprime mortgage crisis could hit 945 billion dollars as the fallout spreads throughout the global economy.

The IMF report said that falling US housing prices and rising defaults of residential mortgages could lead to losses of 565 billion dollars.

That, combined with other categories of loans originated and securities issued in the United States related to commercial real estate, the consumer credit market and corporations “increases aggregate potential losses to about 945 billion dollars,” according to the report.

The IMF’s semiannual Global Financial Stability Report continued to state that “the crisis is spreading beyond the US subprime market – namely to the prime residential and commercial real estate markets, consumer credit, and the low-to-high-grade corporate credit markets.”  Read More

What Action Should Real Estate Investors Take?

Exercise Caution!

Real estate investors must exercise caution in today's volatile real estate market.  Here is a suggested game-plan:

• While home prices are still declining in many bubble markets across the country, you should stay on the side lines until you see solid indicators that home prices have bottomed in your market.
• Not all markets have been hit by declining home prices.  There are many areas throughout the US where price declines were minimal and have even increased.  You should target these Bargain Towns for investment opportunities.
• Consider commercial income property for investment such as multifamily property, office buildings, shopping centers, retail buildings, self-storage property, mobile home parks and the like.  The value of income-producing property is dependent to a large extent on the income it generates.   You benefits from monthly cash flow as well as future appreciation.

For help in making good investment choices, I recommend you review the section Be a Better Investor

Tags: finance, investing, money, real estate