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 through 2011, and most of 2008, in most areas of the country, housing prices fell, in most areas by more than 20% since the height of the market.Since that time, prices have gradually moved upward (in most areas), and today, homes are generally valued at, near or above the pre- 2008 levels. 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.
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. This "circle of circumstances" was that this policy created even fewer qualified buyers, thus causing additional havoc in the housing market.
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 neared its top, and has come down since 2011, will hopefully increase home buying in the near future, as it has in the past couple of years. Although mortgage rates have crept up slightly from the historic lows, they are still significantly lower than historically, and most people realize that, in the future, they probably will rise gradually from these lower levels (as the overall world economy improves) The government continues to indicate that it will exert pressure on lending institutions to make consumer loans, including mortgages, more readily available, which should also be a plus.
Therefore, with low mortgage rates, lower - than - peak home prices, and a slight easing of the mortgage loan availability, there has been a trend for qualified home buyers to take advantage of a great circumstance, for the last few years. The process began with a high degree of refinancing, and now serves as an impetus for serious buyers to act sooner rather than later. The real estate market, however, has been inconsistent during this opportunity period, while some still appear to be in a "wait and see" type mode. Obviously, as the economy increases, and mortgage rates 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 through 2011, and most of 2008, in most areas of the country, housing prices fell, in most areas by more than 20% since the height of the market.Since that time, prices have gradually moved upward (in most areas), and today, homes are generally valued at, near or above the pre- 2008 levels. 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.
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. This "circle of circumstances" was that this policy created even fewer qualified buyers, thus causing additional havoc in the housing market.
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 neared its top, and has come down since 2011, will hopefully increase home buying in the near future, as it has in the past couple of years. Although mortgage rates have crept up slightly from the historic lows, they are still significantly lower than historically, and most people realize that, in the future, they probably will rise gradually from these lower levels (as the overall world economy improves) The government continues to indicate that it will exert pressure on lending institutions to make consumer loans, including mortgages, more readily available, which should also be a plus.
Therefore, with low mortgage rates, lower - than - peak home prices, and a slight easing of the mortgage loan availability, there has been a trend for qualified home buyers to take advantage of a great circumstance, for the last few years. The process began with a high degree of refinancing, and now serves as an impetus for serious buyers to act sooner rather than later. The real estate market, however, has been inconsistent during this opportunity period, while some still appear to be in a "wait and see" type mode. Obviously, as the economy increases, and mortgage rates 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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