Is it Really The Worst of Times?
Or Could it Be the Best of Times?
Is the cup half full, or is it half empty? Like pretty much everything else in life, it depends on how you look at it.. The doom and gloom package delivered by the national media seems to be losing it’s momentum. There is no doubt that the real estate investment community most certainly took a colossal hit from an over-aggressive buying frenzy, fueled by unwise and unsafe lending practitioners. Some of these firms willingly duped borrowers they had cause to know could not honor their loans. Many borrowers signed loan agreements under the assumption that their investment would continue in the upward spiral.
We Americans are a resilient lot and have showed time and time again that when something isn’t working, we fix it. The fixing time is at hand, with assistance coming in the form of increased loan limits, low interest rates, government support to lenders, economic stimulus packages and the like.
Residential properties are adjusting to real values and are influenced further still by real estate appraisers who in effect now govern what bankers consider when evaluating loan portfolios. A reasonable profit is still available to sellers who will acknowledge a simple truth. Consider that an appreciation of 5% to 8% from a 2002 benchmark is an adequate return on investment and let go of the thought that your property is now worth multiples of that 2002 figure. The buying public is now seeing homes and properties with prices about 20 to 25% lower than previous offerings.
2007 ranked in as the fifth highest existing home sales volume in recorded history. According to the National Association of Realtors, since September, sales volumes have stabilized into narrow fluctuations, even managing a modest 2.9% increase in February.
Lawrence Yun, NAR chief economist, said the gain is encouraging. “We’re not expecting a notable gain in existing-home sales until the second half of the year, but the improvement is another sign that the market is stabilizing”, he said. “Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year.
What can this all mean for the local market? One would expect good things to come from the buyer incentives right now. Prices are down, some way down. Interest rates are extremely favorable.
There is an enormous inventory of homes available. Loan limits of federally backed mortgages have expanded to match housing costs. So, looking at the cup before us, it encouraging to imagine what will happen as buyers everywhere grab their pocketbooks and take advantage of the best buyers market we have seen in decades. Perhaps it’s time you took a look at the local real estate market to consider joining in the buyers’ bandwagon.
Submitted by Joyce Ruschhaupt,
Broker & Realtor, Director- Plumas Association of Realtors
