(PRWEB) June 3, 2006 -- Author of "Paint Rags to Riches--Becoming A Real Estate Millionaire," Robert Clyde Affolter notes that over the last few years many people have benefitted from the booming real estate market. As discussed in his book, having a knowledge of the economy and market forces is important to understanding future trends in real estate.

For example, part of the equation was the low interest rate. Another part was new mortgage products which allowed people with little or no down payment to get into their first home. Adjustable rate mortgages and some interest only loans have also fueled the boom.

As the Fed continues to increase interest rates to cool the economy the pool of potential real estate buyers is reduced. Using a conventional mortgage, a family that can afford a $200,000 mortgage at 5% can only afford a $179,074 mortgage at 6%. To be able to afford the same house with that one percent jump in interest rate, the family would have to increase its monthly income by over 11%. That would be the kind of inflation the Fed is trying to avoid. Understanding those numbers and using a financial calculator is just one chapter in his book.

Affolter predicts a downward pressure on prices until the economy cools. As prices level off, the wild speculation we have seen over the last several years will also fade away. However, there is still a lot of new construction underway and developers can probably reduce their margins and still make money–another downward force on prices.

"In some areas of the country we have seen real estate price increases of 20% or more per year for the last few years. That means someone who bought four years ago could sell for 40% under today's prices and still be making money on their home investment." said Affolter.

He continued, "The savvy investor will be watching for opportunities. There may be some sellers who will soon hit the end of their interest only loans or their adjustable rate mortgages and be looking for a way out of their mortgages. If they bought several years ago, they can sell under the market and still make a small profit."

Affolter's book includes check lists for comparing properties and tips for developing strategies for long term success. The book makes the point that every home is an investment. Those who know what they are doing will make money on nearly every purchase.

The book also explains balance sheets, income statements and credit scores in an understandable and fun to read manner. It was meant to be a primer on real estate but many professionals are finding it to be a valuable tool.

Right now he recomments finding a trustworthy real estate agent and learning what real estate was selling for two to five years ago. With the help of his book, buyers can make comparisons and start shopping. He believes that in the coming months there will be deals to be made and eventually real estate prices will be higher than ever.

Although market conditions are changing, Affolter says, "It's not too late to buy real estate."

Robert Clyde Affolter is the author of "From Paint Rags to Riches – Becoming a Real Estate Millionaire." He can be reached at http://RobertClydeAffolter.com. For more information on the book go to http://www.InnateFoundation.com or your online book store.

Source: prweb