JANUARY 2012 BLOG

There is a change in the real estate market! There is a surge in activity. Throughout the 35 years that I have been in real estate sales, I have developed the ability to sense change, usually about two weeks or more before the change is reported on television and in the press. This is because our company’s experiences reflect what is going on in the industry at large. Interest rates are at an all time low! While underwriting standards for loan approvals has been tightened a bit, low down-payment FHA, VA and conventional mortgages are still readily available to qualified buyers. In short, buying now is a wise thing to do. Prices are at a low point, down between 20% and 40% throughout the nation. Some regions have been impacted more than others. And, within each region, communities are not affected equally.

So, there is the chilling effect that can accompany a reviving real estate market. That is, sellers will refrain from selling at these low prices, if they believe that the market is about to recover. Therefore, buying conditions will likely never be better. Almost certainly, conditions will swing back in favor of the seller, as the economy improves. Regretfully, you can count on the banking industry to raise rates just as soon as they feel they can! They are interested in profitable lending. So, expect no quarter from them. Instead, protect your own interests by purchasing while rates are low and prices are low..

Seller’s have a different reason to be motivated in this market. Sellers know that when mortgage rates increase, as they surely will, fewer buyers will be qualified to purchase in any given price range. However, the motivation driving sellers is less than that driving buyers.

Low rates, low prices, and low down-payments can mean healthy profits in the future for buyers. For sellers, accepting a lower price now and purchasing a larger, more expensive home at also lowered prices, can bode well for them, too! And for those people who ‘flip” houses as a regular practice, this type of thinking is encouraging. The seller moving to a less expensive property may be adversely affected. Even in such cases, motivation can be found in lower taxes, lower cost of living in certain regions of the country, or some other important reason, i.e., moving to be near children and grandchildren!

To test this analysis ask yourself the following questions. (1) do you believe that interest rates will go down below 3.75%, which is an all-time low? Do you think that sellers are resisting dropping their prices further? If you answer “yes”, then call Kiamie Agency, Inc., Realtors, now. Don’t hesitate!