The most recent Housing Opportunity Index – released by the National Association of Homebuilders and Wells Fargo Bank – shows that almost 73 percent of homes sold in the first quarter of this year were “affordable.” In order to qualify as “affordable,” the total costs of a home (mortgage, taxes, etc.) must not exceed 28 percent of the median family income (currently $64,000).

A few factors contributed to this jump in affordability, and it is a bit of a good news/bad news situation.

Plummeting home prices are a major factor in affordability. Unfortunately, the recent drop in prices is primarily due to foreclosures, which means that someone had to lose their home for it to become affordable for someone else. And until foreclosures slow down, prices won’t stabilize.

Another factor is record low interest rates, which hovered near 5 percent for a 30-year fixed loan at the end of the first quarter. This is good for individuals who qualify for those loans, but many who need a lower rate to be able to stay in their homes don’t qualify.

I think the housing market will find its true bottom by the end of the year, when the Obama administration does something to tackle the last roadblock: the vast number of homeowners who are currently underwater.

While there are still obstacles in the housing market, it seems like now is a great time to buy. Sure, prices may come down a little more, but the drastic drops appear to be behind us (and trying to time any market perfectly never works). If you find a home you like, at a price you like, don’t second-guess yourself. Interest rates won’t stay this low forever, and neither will prices.

And if you are looking for the country’s most affordable large city, check out Indianapolis. It has topped the list for the last 15 quarters.

[Ed. Note: Detroit native Christian Hill is an active follower of the real estate markets, the auto industry, and practically every other investment vehicle under the sun. You can catch his insightful commentary and advice for free in Investor's Daily Edge. Click here to find out more.]

Comment on this article

First off, the economy is playing right into Hyundai’s hands. Long known as a maker of low-priced vehicles, Hyundai in an enviable position. The Sonata is priced roughly $2,000 less than a Toyota Camry, and the Santa Fe SUV is almost $10,000 less than a Toyota RAV4.

While still lagging far behind Toyota in sales, Hyundai does have one advantage: A full 55 percent of its sales come from countries in emerging markets, versus 31 percent for Toyota. And because those countries have withstood the worst of the global slowdown, this means the company can continue to see greater sales growth.

Also helping Hyundai is its product mix. Almost 65 percent of the automobiles it makes are small cars. In a world of rising gas prices, demand for these vehicles will increase, allowing the company to capture market share while other manufacturers re-tool their assembly lines.

Finally, the company introduced its AssurancePlus program, where it will make your payments for three months if you lose your job. And if you’re unemployed longer than that, Hyundai will buy back the vehicle. (This idea has proven to be so strong that GM and Ford recently announced similar programs to encourage people to buy.)

If you’re looking for an investment that could be on the upswing, Hyundai fits the bill.

[Ed. Note: Detroit native Christian Hill doesn't just follow the auto industry closely, he offers advice covering everything market-related in Investor's Daily Edge, ETR's sister publication. Sign up free here ]

Investing in automakers on the rise is just one investment you can profit from in 2009. This June, a group of financial experts will give you their top recommendations for making 2009 the best year ever for your portfolio. Find out more here.]

Comment on this article

The rest of the country (and world, it seems) has realized that Detroit has incredibly cheap real estate, and plenty of it. Investors – some from as far as away as the U.K. – are buying up lots of houses (for as little as $10,000) to fix up and rent out.

While it might be tempting to buy an investment property for only $10,000, there are at least three reasons to be cautious:

• In comparison to other parts of the country, real estate taxes in depressed areas are high and could get worse. A shrinking population means a smaller tax base, so everyone left has to cough up more money.

• Take your rehab bill and double it. Not because of cost overruns but because your upgrades will walk out the door at night. Theft is a major problem.

• Don’t count on getting government-assisted renters. The easy days of the government sending you the rent check are long gone. According to a friend of mine who has a few rental properties in Detroit, the number of landlords looking for Section 8 renters far outstrips the supply.

With that being said, I believe investing in Detroit is worth considering… as long as you do your homework first. Where else can you buy a house for less than a new car and generate cash flow every month?

[Ed. Note: Whether you're interested in real estate, the stock market, or other investment opportunities, you can get Christian Hill's take in Investor's Daily Edge, Early to Rise's sister publication. Sign up for free right here.

Buying and renting out real estate is just one investment you can profit from in 2009. This June, 9 financial experts will show you exactly how you can make a fortune in today's market. Find out how you can get their top recommendations for making 2009 the best year ever for your portfolio right here.]  

Comment on this article

The dividend yield is calculated by dividing the dividends paid per share over the course of a year by the stock’s price – and this number is of paramount importance to income investors. Oftentimes, there is a minimum yield that they are willing to accept when they invest in a stock.

And this is where the current markets could send you down the wrong path. Let’s take DuPont (DD), for example. For the past three years, DuPont has traded in a range from around $40/share to $50/share. During this period, it has paid a consistent dividend between $0.37 and $0.41. That would give investors a dividend yield between 2.9 percent and 3.7 percent. 

A nice return, but perhaps too low to hit the radar screens of many income investors. 

But now let’s look DuPont’s dividend yield today: 6.2 percent. 

Your first assumption might be that the company has really fattened up its dividend. But that would be incorrect. What has occurred is that the stock price has fallen so much that the yield has been “artificially” driven up. 

DuPont is now trading for around $26/share – about half of what it was even three months ago. This means the denominator in the equation for calculating dividend yield is much lower… and that’s why DuPont’s yield is so high. 

When the market moves back up and DuPont’s share price follows, its yield will plummet back down.

[Ed. Note: Finding fundamentally strong companies is a good way to prosper despite the market's condition. But you can also make money on companies that are ready to crumble. Learn how to spot the "red flag" signals that could predict (with as much as 92 percent certainty) when a company's stock is going to tank.]

Comment on this article

Let’s take dividends as an example. Many companies have slashed or completely eliminated dividends to keep more cash on hand to weather the downturn. Does this mean their current dividends should be used to measure their future income streams? Of course not.

It’s better to isolate this period from your analysis and look, instead, at a company’s historical dividend payments. Take a look at what the company has paid out over the last five years or so. If it has a steady and/or increasing dividend – with the only blemish being the most-recent quarters – then it is probably safe to assume that once the economy gets turned around, its dividend stream will return to normal. 

Don’t forget that we are in the midst of the worst market in decades. Strange things are happening, but it will eventually return to normal. Don’t miss out on long-term investment opportunities by focusing too much on current conditions.

[Ed. Note: Finding fundamentally strong companies is a good way to prosper despite the market's condition. But you can also make money on companies that are ready to crumble. Learn how to spot the "red flag" signals that could predict (with as much as 92 percent certainty) when a company's stock is going to tank.]

Comment on this article

There is a solution that many folks have turned to.

Netflix!

This online movie rental service has no late fees. Ever. And their selection is much more extensive than what you find at your neighborhood Blockbuster or video store. The perks are better too. New releases are almost always available. You can schedule your next 10 movie deliveries – and you can modify your list if your tastes change. To return a movie, you just drop it in the mail. In about two days, the next one on your list is delivered. And now, you can even download and watch Netflix movies on your computer.

The best part is that a subscription to get one DVD at a time is under $10/month, cheaper than renting two movies a month from most video rental places.

With subscriptions being bought as holiday gifts for family and friends, Netflix (NFLX) should ride a revenue wave that will push its stock price up over the next few months. Currently trading around the $27/share level, I expect it to pop back up to the $32-$34/share level soon. Pick up some shares now.

[Ed. Note: The market may not look so hot right now. But you should be ready to take action when the moment strikes. Some incredible opportunities are headed your way. For an educational program that lays out the simple steps you need to take advantage of them, click here.]

Comment on this article

But that shouldn’t deter you. Taking a few chances with some of your speculative portfolio money could lead you to windfall profits.

I’m not talking about buying penny stocks that rarely return anything more than a headache. I’m talking about household names that have just been beaten down for a multitude of reasons. The list I ran through a stock screener of companies with a market capitalization of over $1 billion and share prices less than $10/share returned 221 results.

I don’t want you to go crazy and buy up thousands of shares of companies like these. You should still be prudent and diversify. As an example, you could invest $100 in 10 of the following 16 companies. You would have $1,000 invested, and would need only a few to pay off to get a great return. 

Under $10/share (as of 11/21/08):                

Time-Warner (TWX)                          

UBS                                                    

Dell Computers (DELL)                                  

Yahoo (YHOO)                                              

Alcoa (AA)                                                     

Starbucks (SBUX)                                          

Macy’s (M)                                         

Applied Materials (AMAT) 

Under $5/share (as of 11/21/08):

Citigroup (C)

Motorola (MOT)

Sprint (S)

AIG

Ford (F)

Sun MicroSystems (JAVA)

General Motors (GM)

[Ed. Note: The market may not look so hot right now. But you should be ready to take action when the moment strikes. Some incredible opportunities are headed your way. For an educational program that lays out the simple steps you need to take advantage of them, click here.]

Comment on this article

Even so, I’m sticking with what I originally said. I still think the government will step in and provide the automakers with the loans they need to survive. As a GM spokesperson has said, bankruptcy “creates more problems than it solves.”

GM is doing all it can to cut costs. It is laying off workers and closing plants. It is scrapping plans for some vehicles. It is going as lean as it can in the face of the worst auto market in 17 years. The company is not just sitting around, waiting for divine intervention.

How’s this for a reason for the government to step in: This year, the economy has shed approximately 1.2 million jobs. Should GM go under, it will cost 2.5 million jobs in the first year alone. I can’t help but think the government will do everything it can to avoid that disaster.

If things unfold as I expect and GM gets the loan it needs – and if you are the adventurous type – a LEAP option for the January 2010 calls could be a very lucrative play.

[Ed. Note: You may be surprised to hear it, but there are plenty of ways to make money in a down economy. You just need to be poised to take action as soon as the opportunities arise. Discover the simple steps you need to take to make money in any market condition right here.]

Comment on this article

Did you re-examine your portfolio mix after you sold those stocks? Most likely you didn’t, so do it now.

Selling at a loss is often an emotional and stressful experience. As a result, you aren’t necessarily focusing on what remains in your portfolio, and you could quickly become overweight in one stock or sector.

After any selling, take the time to make sure you have the mix you want. It may mean selling some additional holdings to bring everything back in line, but it is best to take care of that now, rather than get caught down the road.

[Ed. Note: Protecting your wealth is about more than getting in and out of the market at the right time. It means keeping your portfolio balanced.

Keep your money safe during these shaky times by making smart investment choices. Companies with strong fundamentals are best equipped to withstand major market changes. But don't be afraid of fluctuations in the market. These movements can offer you the perfect opportunity to profit .]

Comment on this article

The individual investor has taken it square on the chin. Over $2 trillion has evaporated from retirement accounts in the last 15 months. Given the massive amount of lemons around, how can you make lemonade? 

You can start by either building or rebuilding your portfolio.

If you are just starting out in the market, value picks are plentiful. Now is the perfect time to pick up shares of industry leaders at deeply discounted prices. Sure, there may be some downside left, but no one can perfectly time any market.

And if you are one of the many who have seen their investments beaten up, now may be the time to buy into some industry leading companies that were too pricey for you in the past. Remember when Google was at $700 share? You can now buy it at half that.

If the price is right and you feel strongly about a company, you might as well buy it now. The market will rebound, valuations will return, and you will be wishing for the opportunity to go back and buy at today’s prices. 

[Ed. Note: Keep your money safe during these shaky times by making smart investment choices. Companies with strong fundamentals are best equipped to withstand major market changes. But don't be afraid of fluctuations in the market. These movements can offer you the perfect opportunity to profit.]

Comment on this article