How does one really know when to buy or sell real estate? There
are many factors involved, and without a crystal ball, you can't be 100%
certain! Every day, the media publicizes a lot of confusing
information, and it is very difficult for the average person to know what it really means.
We all know that during all of 2009, 2010, and 2011, and most of 2008, in most areas of the country, housing prices fell in most areas by more than 30% since the height of the market. 2012 was a more stable year, and prices began to come back during the past two years. However, many people tend to forget that the real estate market has experienced these down cycles before, albeit usually not as severely. What is unique about this "cycle"is that the dramatic drop in prices has been accompanied by record low mortgage rates! While one would logically think that would create a buyers market, the combination of high joblessness and under-employment, combined with the lower stock prices, and extraordinarily tight credit market (making mortgage loans much more difficult to get), has caused buyers market pricing conditions but neutral market market conditions. The number of buyers has been inconsistent - especially the number of qualified buyers. Buyers realize that they do not have to act with the urgency that they did when the market was higher because there are very few bidding wars out there. It took sellers quite a while to realize, or at least accept the fact that they were not going to be able to sell their houses at the pricing when the market peaked, and thus many homes either did not sell, or sold only after numerous price adjustment (PC way of saying "price drops"), and the number of days a listed home remained on the market increased dramatically. However, understand that this is a region - by - region scenario, and therefore the purpose of this article is more to point out the uncertainties than to be specific.
Qualified buyers - - those with good credit (credit scores of 700+), at least 20% to put down, and sufficient demonstrable income - - got some "great deals." Lending institutions received billions to "bail" them out, but very little of this money went to loosening credit. Most of that money simply made the banks more profitable. The typical American's credit score was "arbitrarily" lowered because of how it is calculated, and the impact that most credit card companies lower the vast majority of individuals credit limits. This caused the credit ratios to change, and thus credit scores to be lowered. This, in turn, tightened the mortgage market even further, because individuals with seemingly good credit, saw their credit scores lowered because of bank policy that had nothing to do with them specifically. The continuous of this "circle of circumstances" was that this policy created even fewer qualified buyers, thus causing additional havoc in the housing market. Although mortgage rates have remained at or near record lows for a few years, other economic uncertainties (include the job market and world economy) have impacted home selling and buying patterns and perspectives.
The fear of the recession and the joblessness rate created many potential buyers to shy away from house hunting. The Federal first-time housing credit, combined with the extension and enhancement of the program to cover many that have held homes for more than five years, helped bring out some additional buyers. Since this program expired in mid-2010, there was, temporarily, an added incentive to buy a home. The indication that the recession has or is close to coming to an end, has created somewhat of an increase in consumer confidence, as has the general feeling that the joblessness rate has or neared its top, and has come down somewhat since 2011 (albeit that unemployment is still somewhat high, but of higher concern may be that under-employment has continued and the "real wages" indexes have had less than stellar results). Hopefully, consumers will continue to gain confidence, and the balance between supply and demand will be healthy enough to increase home buying in the next several months. The government has been indicating that it will exert pressure on lending institutions to make consumer loans, including mortgages, more readily available, which should also be a plus, but somewhat confusing signals have been received because of sterner government review of banks and their reserves, etc.
Therefore, with near - record low mortgage rates, somewhat low home prices, and a slight easing of the mortgage loan availability, there was a limited window for qualified home buyers to take advantage of a great circumstance, in the first half of 2010, that has been renewed to varying degrees since then. The real estate market, however, has been rather inconsistent since then, and appears to be in a "wait and see" type mode. Obviously, as the economy hopefully continues to improve, and consumer - confidence goes up, and mortgage rates eventually rise, and markets stabilize, the cost of home ownership will increase. A serious home buyer should take advantage of these conditions, before we return to less favorable buying conditions. Remember that the real estate market is cyclical, and there may not be a better time to buy a house for many years than there is today!
We all know that during all of 2009, 2010, and 2011, and most of 2008, in most areas of the country, housing prices fell in most areas by more than 30% since the height of the market. 2012 was a more stable year, and prices began to come back during the past two years. However, many people tend to forget that the real estate market has experienced these down cycles before, albeit usually not as severely. What is unique about this "cycle"is that the dramatic drop in prices has been accompanied by record low mortgage rates! While one would logically think that would create a buyers market, the combination of high joblessness and under-employment, combined with the lower stock prices, and extraordinarily tight credit market (making mortgage loans much more difficult to get), has caused buyers market pricing conditions but neutral market market conditions. The number of buyers has been inconsistent - especially the number of qualified buyers. Buyers realize that they do not have to act with the urgency that they did when the market was higher because there are very few bidding wars out there. It took sellers quite a while to realize, or at least accept the fact that they were not going to be able to sell their houses at the pricing when the market peaked, and thus many homes either did not sell, or sold only after numerous price adjustment (PC way of saying "price drops"), and the number of days a listed home remained on the market increased dramatically. However, understand that this is a region - by - region scenario, and therefore the purpose of this article is more to point out the uncertainties than to be specific.
Qualified buyers - - those with good credit (credit scores of 700+), at least 20% to put down, and sufficient demonstrable income - - got some "great deals." Lending institutions received billions to "bail" them out, but very little of this money went to loosening credit. Most of that money simply made the banks more profitable. The typical American's credit score was "arbitrarily" lowered because of how it is calculated, and the impact that most credit card companies lower the vast majority of individuals credit limits. This caused the credit ratios to change, and thus credit scores to be lowered. This, in turn, tightened the mortgage market even further, because individuals with seemingly good credit, saw their credit scores lowered because of bank policy that had nothing to do with them specifically. The continuous of this "circle of circumstances" was that this policy created even fewer qualified buyers, thus causing additional havoc in the housing market. Although mortgage rates have remained at or near record lows for a few years, other economic uncertainties (include the job market and world economy) have impacted home selling and buying patterns and perspectives.
The fear of the recession and the joblessness rate created many potential buyers to shy away from house hunting. The Federal first-time housing credit, combined with the extension and enhancement of the program to cover many that have held homes for more than five years, helped bring out some additional buyers. Since this program expired in mid-2010, there was, temporarily, an added incentive to buy a home. The indication that the recession has or is close to coming to an end, has created somewhat of an increase in consumer confidence, as has the general feeling that the joblessness rate has or neared its top, and has come down somewhat since 2011 (albeit that unemployment is still somewhat high, but of higher concern may be that under-employment has continued and the "real wages" indexes have had less than stellar results). Hopefully, consumers will continue to gain confidence, and the balance between supply and demand will be healthy enough to increase home buying in the next several months. The government has been indicating that it will exert pressure on lending institutions to make consumer loans, including mortgages, more readily available, which should also be a plus, but somewhat confusing signals have been received because of sterner government review of banks and their reserves, etc.
Therefore, with near - record low mortgage rates, somewhat low home prices, and a slight easing of the mortgage loan availability, there was a limited window for qualified home buyers to take advantage of a great circumstance, in the first half of 2010, that has been renewed to varying degrees since then. The real estate market, however, has been rather inconsistent since then, and appears to be in a "wait and see" type mode. Obviously, as the economy hopefully continues to improve, and consumer - confidence goes up, and mortgage rates eventually rise, and markets stabilize, the cost of home ownership will increase. A serious home buyer should take advantage of these conditions, before we return to less favorable buying conditions. Remember that the real estate market is cyclical, and there may not be a better time to buy a house for many years than there is today!
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