Check out this email I just got from a local escrow officer:
Hi Jeff,
There’s a new trend in real estate. Recently released national statistics for existing homes show that sales prices rose 4.2% from February to March, which is much higher than the predicted 1.8%. Four facts stand out:
First-time buyers accounted for 53% of the transactions (stats based on contracts written before the new tax credit).
Distressed properties accounted for over half of the transactions.
Investors are starting to take advantage of great prices in some areas. Real estate-related funds are making a comeback. Some, such as Equity Residential Properties, are up 20%.
New inventory is shrinking fast as banks are beginning to offer programs for renegotiating existing loans rather than foreclosing.
The federal government is offering $8,000 tax credit to a 2008 return that never needs to be repaid. This offer is for first time homebuyers as well as anyone who hasn’t owned a home for three years. Lawrence Yun, National Association of Realtors’ Chief economist predicts, “By early summer we should be seeing a positive impact on home sales resulting from the stimulus provisions.”
NAR President Charles McMillan reports that, “Record-high housing affordability conditions are helping markets recover, with home sales higher than a year ago in most areas of California, Florida, North Virginia and cities such as Minneapolis, Las Vegas, and Phoenix. The housing market heals from the bottom up as sellers trade up or down, according to their needs.”
If this is the trend, then that means the bottom has already passed (at least on the mainland), since the only way to really know when the market has hit the bottom is to see it back on the rise.
I personally think it’s a bit early to tell if the bottom has hit.
But I don’t think the bottom of the market is really what people should be focused on. I believe that there are great deals in any market. As well as there are overpriced properties in any market.
So what becomes important?
This is what I think:
What can you afford?
What is your goal? Invesment, personal residence, etc.
Is there a motivated seller in the area you interested in?
Number 3 is the key. There are motivated sellers in any market. Someone is always running into some sort of life issues that forces them to become motivated. And when they’re motivated, they will negotiate on price and terms.
Also, affordability is the main issue. If you are planning on taking out a loan, price is not the only factor in the equation of affordability. You must consider the amount required for down payment and the interest rate.
For example, a $200,000 loan at 5% interest is a $1,073.64 monthly payment.
But a $100,000 loan at 12.6% interest is also a $1,073.64 monthly payment.
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Did the bottom of the real estate market already pass us?
Check out this email I just got from a local escrow officer:
If this is the trend, then that means the bottom has already passed (at least on the mainland), since the only way to really know when the market has hit the bottom is to see it back on the rise.
I personally think it’s a bit early to tell if the bottom has hit.
But I don’t think the bottom of the market is really what people should be focused on. I believe that there are great deals in any market. As well as there are overpriced properties in any market.
So what becomes important?
This is what I think:
Number 3 is the key. There are motivated sellers in any market. Someone is always running into some sort of life issues that forces them to become motivated. And when they’re motivated, they will negotiate on price and terms.
Also, affordability is the main issue. If you are planning on taking out a loan, price is not the only factor in the equation of affordability. You must consider the amount required for down payment and the interest rate.
For example, a $200,000 loan at 5% interest is a $1,073.64 monthly payment.
But a $100,000 loan at 12.6% interest is also a $1,073.64 monthly payment.
Any thoughts, questions, opinions? Comment below.