Great Time To Make Your Move!
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CORY T. NEU
BROKER, GRI, e-PRO
The Time To Buy Is Now!
A few months ago, I wrote about perception and how it relates to the real estate market. Pre-conceived notions have and will continue to keep people out of the market when they really should be in. In 2006 everyone was completely convinced that if they owned a home, they were doing the very best thing for their future, no matter how they bought it or at what price. In fact it was not unusual to have four or five buyers offering on one property. There were all kinds of financing options available to those with all different levels of income, credit history & down payments creating an incredible and unprecedented consumer purchasing power. This was considered a fantastic time to "get into the real estate market" and I heard over and over what a "Great Real Estate Market" it was.
I believe that almost anytime is a good time to buy your home if the time is right in your life. There are still plenty of people who bought in 2007 who are still quite happy with their situation. The reason being, is that a home purchase is much more than an investment. Those who bought for all the right reasons with sensible financing are doing very well.
Which brings us to todayís market. There are so many questions the consumer has in todayís market that seems to be leading us down the path that todayís real estate market is "bad". Several home sellers would agree with that statement, but what about todayís Buyers? The inventory is great, interest remains at all time lows, the long-time benefits of owning a home are still there, and Uncle Sam is waiting there with Tax Credit Incentives ($8,000 for 1st time buyers and $6,500 for repeat buyers). SO, WHAT'S KEEPING BUYERS FROM BUYING?...Perception. There is perception that the market could still be falling. There is a perception that this is a bad time to sell. And, there is perception that real estate has become a "bad investment".
Letís first take the perception that the market could still be falling. When it comes to affordability, the price is a big factor, but it is one of several factors in the decision making process. Interest rates and available financing are huge factors that most people discount when looking at the market. Financing has become tighter in the last two years with more and more guidelines and buyer qualification requirements. For example, you donít see anymore lenders advertising "no money down", and where did those often seen QuickenLoans.com commercials on TV go? They are just not there anymore, which has a huge effect on affordability, and that could get worse in the coming years. Equally as important are interest rates. Most experts agree that interest rates cannot stay this low, and are likely to rise. So, even if prices did still fall some more, it is possible, if not likely, that affordability (payment & loan costs) will get worse. We have a sort of "perfect storm" of low prices, easy yet still affordable financing, tax credit incentives and high inventory that makes this A GREAT TIME TO BUY!
The perception that this is a bad time to sell is certainly well established with the recent falling prices. When we are always told "buy low-sell high", why would anyone want to sell in a down market? Here is why: As long as you are staying in the market, NOW IS A GREAT TIME TO MAKE A MOVE! Yes, you will be selling at a discount, but you will also be buying at a discount. And, many times if you are buying up, you will be saving more on the buying side than you are losing on the selling side. Consider this; letís just say that home prices are down 20% across the board. If your $200,000 home is down to $160,000 and you had to sell at a loss of $40,000, but you turned around and bought a house for $240,000 that would have sold two years ago for $300,000. Thatís a $60,000 discount.
Finally, there is the perception that real estate has become a "bad investment". This is a misperception, and here is why: If you look at the graph, you will see what real estate values have done in the past 10 years. The graph shows that we had a very stable market prior to 2005, what the market did from 2005 to 2007, and where we are now. If you follow this graph you can see that if you bought a home for $150,000 in December of 1999, it would sell for somewhere around $220,000 today. Not bad considering some of todayís perceptions. People lose sight that most people who buy homes are looking toward their long term future, not for their short term gains. History has always been the best indicator of the future, and real estate has always been AN OUTSTANDING LONG TERM INVESTMENT!
|© Copyrite, All Right Reserved, Cory T. Neu, Broker, GRI, e-Pro, Cheryl Neu Real Estate, January 20th, 2010|