Speculators Try to Cash In on Housing Boom

May 24, 2005 — -- A speculative fever has taken hold of the real estate market, attracting a whole new class of investors looking to get rich quick.

April home sales came at the fastest pace in history -- according to the National Association of Realtors -- selling at an annual rate of 7 million homes a year.

The boom has pushed housing prices to an all-time high. The median price of a home sold last month was $206,000.

Almost a quarter of the homes are being bought by speculators, who don't intend to live in the homes but instead plan to make money off their investment.

Two years ago, Anthony Behary was repairing transmissions, making an annual salary of $40,000. Today, the former mechanic is a full-time real estate investor.

"In the first year of business doing real estate, I made $120,000," Behary said. "I tripled my income."

Behary is one of a growing legion of Americans trying to cash in on real estate values that seem to go nowhere but up.

Earlier this month, 46,000 Americans hoping to get in on real estate frenzy packed the Los Angeles Convention Center for a Real Estate Wealth Expo -- the slogan: "One Weekend Can Make You a Millionaire."

Home prices have been increasing at the fastest pace in 25 years -- up 15 percent over last year -- while the stock market goes nowhere. Stock investment clubs are down 16 percent since 2003 while real estate investment clubs are multiplying -- up 45 percent since 2003.

Experienced real estate investors say many of these stock market refugees are late to the party and have unrealistic expectations.

"A lot of people were burned in the stock market, and there will be people who will be burned in real estate," said James Smith, president of the Houston Realty Investment Club.

Behary, the mechanic turned real estate investor, isn't worried about getting burned. Later this week, he expects to get a check for $65,000 -- his profit on the sale of a house he bought just five months ago.