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 from the middle of 2008 (and before in some areas) through 2014 (in many places), in most areas of the country, housing prices fell, in most areas by more than 20% since the height of the market. 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 (through 2014), 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. The continuous of 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. Since 2014, in many regions, the real estate market has once again picked up, raising prices not only to previous levels, but often to higher ones. However, mortgage rates remain low, which means a qualified buyer can afford far more house for his dollars, because there is a significant savings when interest rates are low.
Therefore, with record low mortgage rates, 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. For the next three years or so, the market slightly and slowly improved, and theb began to heat up slightly in 2014, and significantly, this year. In fact, this summer, it has become a seller's market, because there is limited inventory. 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!
You should also understand that real estate, in most cases, is best held for a longer period, rather than traded as a shorter term commodity. Consider your housing expenses, as well as the investment ones, unless you are buying and selling real estate, as an investor!
We all know that from the middle of 2008 (and before in some areas) through 2014 (in many places), in most areas of the country, housing prices fell, in most areas by more than 20% since the height of the market. 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 (through 2014), 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. The continuous of 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. Since 2014, in many regions, the real estate market has once again picked up, raising prices not only to previous levels, but often to higher ones. However, mortgage rates remain low, which means a qualified buyer can afford far more house for his dollars, because there is a significant savings when interest rates are low.
Therefore, with record low mortgage rates, 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. For the next three years or so, the market slightly and slowly improved, and theb began to heat up slightly in 2014, and significantly, this year. In fact, this summer, it has become a seller's market, because there is limited inventory. 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!
You should also understand that real estate, in most cases, is best held for a longer period, rather than traded as a shorter term commodity. Consider your housing expenses, as well as the investment ones, unless you are buying and selling real estate, as an investor!
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