I've always been a proponent of buying and holding for the long term, maintaining properties diligently, and establishing productive landlord/tenant relationships. For the past few decades, that formula worked like a charm.
However, times have changed. We are in a period of unprecedented uncertainty with an unconventional monetary policy that has kept interest rates artificially low. Currently a 30 year mortgage can be had for around 4.125%, which is still historically low. Rates staying at these levels for a decade or more is a very unrealistic expectation.
Inflation is starting to tick up, and the Fed officials are getting more heat than ever to start raising interest rates. A true "market" mortgage rate would probably hover around 7% in a sluggish economy. Imagine if mortgage rates crept up from 4% to a still-very-low 5.5%? That is very possible in the near future (maybe 2015?). Owners on the fence will be rushing to sell their homes, and it would cause an avalanche of pessimism to counteract the buying fervor of 2013.
When I started this blog in 2012, I saw some incredible opportunities with distressed sales and low prices, especially with condos and townhomes. I no longer see those bargains. I don't think the market is "super expensive" like it was in 2006, but some areas are starting to look frothy. The rental parity isn't there anymore.
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