We most likely have a little ways to go before Real Estate markets throughout the country finally hit bottom. After all there is still a significant amount of foreclosure inventory that needs to be sold, as well as new foreclosure inventory that has not yet hit the market.
According to Rick Sharga, Vice President for marketing at Realty Trac, a foreclosure listing firm, there were around 700,000 foreclosed homes nationwide at the end of last year that had not been listed yet. This "shadow inventory" of unsold homes certainly could drag the correction out longer.
This period in time however, could eventually looked back at as one of the best in our history to buy a home.
Think about it for a minute when have we ever had the kind of conditions that we presently have now? A large consolidation in housing prices, interest rates teetering on near record lows, 1st time home buyer tax credits, and on and on.
In some respects the housing market is like the stock market. Everyone would love to find the exact bottom and then buy.
If your time line for home ownership does not include a possible transfer over the next couple of years what are you waiting for? You should be jumping at this chance. The cost of home ownership has never been more affordable!
In many areas throughout the country you can own your own home for less than what a similar home would rent for. This is BEFORE you even take into account the tax savings involved with having a home.
While stocks can often times shoot up in a span of a few weeks and home prices do not, don't be foolish enough to assume that interest rates could not jump in a very short period of time. As soon as inflation starts to rear it's ugly head there will be extreme upside pressure on interest rates.
If you are a 1st time home buyer or want to move up in the market to a larger home there has never been a better opportunity. For those that want to think about moving up in the market and have not made the move because of lost equity - STOP WORRYING ABOUT IT! You will make this up on the purchase, as the home you will be buying will most likely have dropped by a larger percentage. For a detailed explanation of this see selling your home in a buyers market.
Interest rates are the X factor right now! The cost of borrowing money is super low. How long this will last is anybodys guess! I truly believe we are nearing the bottom of the Real Estate correction. Rates will not stay this low forever. Don't kick yourself by saying I coulda, woulda, shoulda after the rates jump!
I will leave you something to think about with this 30 second video:
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About the Author: The above Real Estate information on the housing market coming back was provided by
Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.
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Bill...
Our market finally did hit bottom. It has now leveled off and as the investors start arriving I see prices going up as early as the summer months. That will be a very good thing as many homeowner's are honestly trying to hold on as long as they can. I admire those who are doing this instead of crying short sale foul. Who wouldn't? :)
TLW...ROAR!
TLW - Here in Massachusetts we have seen a real change in the market. 1st time buyer are out in full force. The activity level is terrific. This is exactly what the market needs. In order for the Real Estate market to change we need more 1st time buyers to feed the rest of the chain. It is good to hear that you area of Florida has started to change as well.
Craig - Thanks. I think we will slowly bit surely start to see improvements in many parts of the country. Some will take longer than others (most likely California). Interest rates will be one key factor to a sustained recovery.
Bill, I agree with you 100% and we are seeing increased activity in the Akron, Ohio market also! Thank you for a well written post!
Let the media spout it's gloom and doom, my golf game is suffering cause I'm to busy! I'm not showing to tire kickers, these are bona fide buyers now....
Bill,
I like the comment you made "If your time line for home ownership does not include a possible transfer over the next couple of years what are you waiting for? You should be jumping at this chance. The cost of home ownership has never been more affordable!" This is very true and buyers should be moving toward a home now. Nice post my friend.
It's good to hear that y'all are busy. Our business in the metro-Orlando area has picked up somewhat. The stock market is having a rally also. However, I've got to point out that, historically, the stock market has recovered in the middle of every recession while housing has not recovered fully until the end. So this might be a temporary bounce. Make the most of it while you can.
Business in the Baltimore area is picking up. The bottom may be in the rear view mirrow - I hope!
Couldn't see the video on the computer I'm using today, but Amen to the rest of your post.
Eric Lowery, Expert Skills for Real Estate Agents
Bill - great post! We've seen a recent pickup in the market here in Destin (and vicinity) Florida as well.
Bill, I love the kicking in the video. I do think that will happen here. We are very busy with buyers now. The Residents are arriving and need housing for the next 3-5 years.
I don't know if we have hit bottom yet, does anyone?
But, like you said low interest, lowest home prices in years...."the perfect storm".
Thanks Bill for the optimistic post. I feel its always darkest before dawn. Now if we can get the mass media to be more optimistic instead of scaring consumers we will be in good shape!
Everyone lets hope interest rates stay low and the stimulus programs continue to help the process of recovery. It is anyones guess if we are completely out of the woods yet but there is certainly a feeling of a start of progress.
Bill, great blog and I love the video. I think we're about to make a turn and your blog is right on track. OK if I share it with others?
Great post & video Bill!! I agree...we're going to see the bottom fairly soon & now's the time to buy!!
Bill I think we are at bottom... now it is time to cultivate growth. Growing is a process and it is necessary to have the pruning so that we can began the harvest. Change is good!!!
Bill - I like the optomistic post. We all need to push this message. Lamenting in the future that "I should have" can be eliminated now.
Bill--You beat me to the punch...or kick in this case as I was going to use the RE/MAX commercials on my blog too...Nice commentary tie in and so very true. So many people buy at the top of every market. Smart people get in on the ground floor. I think we are in the basement now so it's time to buy! Congrats on the well deserved feature! :)
Bill,
With interest rates super low and housing prices super low, now is absolutely the best time to purchase. Congrats on the feature; you earned it!
Hey Bill - When the business improves in markets (like yours) all over the nation and ya'll sell those homes, many retirees and 2nd home buyers are able to come South and build on that lake or golf course lot they bought in the '90's! (Or buy an existing home!) We're ready to help them in our retirement and second home communities! So sell 'em!
Mary
I wonder how long it will be before inflation rears its ugly head. The Fed can only hold rates down for so long.
Hi Bill,
This post is right on target! The market will remain down for a little bit longer due to the foreclosure invenory...I predict a turnaround sometime this year.
Hi Bill..I think we'll look back in the near future and say we should have bought last December or January, Our Market Activity here is almost 90% of last year, that's a busy market for March.
Oh I have the Re/Max Video on my web site, on my listing page.
Cheers, It's Friday... Go Sell Something :O))
Bill, It looks like so many areas are picking up and getting busy---what wonderful news? And wouldn't it be nice if the news REPORTED this?
Hi Bill!
I would have to say you're righton with your post, and I am seeing the signs here in my market as well. Interest rates went up a little bit yesterday I heard, this shows how unstable they are right now. Great time to buy!
-Lisa
Looks like we finally (after about 3 years) might have a balanced market here in Phoenix.....with about 5.5 months of inventory for single family homes...
The decision is not if rates will go up but when and even if home prices stay the same it could have a significant impact on payments.
Bill - Good analogy to the stock market and fantastic post! The money is cheap, inventory huge, tax credit if you haven't owned a home in three years and tons of education available online. If folks who qualify are hesitant because of the market, they need to understand why this market is super attractive to pull the proverbial trigger.
It is the time to buy a home. I worry long term because we are going to face hyperinflation becasue in order for government to stimulate the economy they have to spend $7 for every $1 in the private secotr. Get ready for double digit interest rates. I am not sure when but I am sure it is coming. I am buying investment house, probably 10 by the end of next year to add to my portfolio at todays rates. The rental market will be great going into the future. It is not that I am trying to frighten my clients, but this is our job to observe the market, not just housing, and do our best to predict the future.
What a great post! We are also starting to see a glimmer of the sunshine after the rain & encouraging people that NOW is an AWESOME time to buy!
I read your headline and thought that you were going to make an insightful distinction between real estate and stocks and how home ownership is not necessarily an investment. I guess not...
Regardless, I totally agree that this down market presents a huge opportunity for investors and buyers alike.
Bill,
I agree with your comments; it's already started here.
Love the video! I am hoping to improve my financial situation to be able to take part before the rise starts!
Hope all is well. Love your posts!
good stuff Bill - and your Re/Max ads have been a huge hit. Good advice too - I think buyers are too complacent in thinking that they have all the time in the world and that things will stay this way for while. They won't. Our market in the Raleigh/Triangle area is already starting to kick in...
I agree with you Bill, our area has a little way to go before we are finished, especially with the number of foreclosures yet to be listed. We are seeing investors start to move on property and a few first time buyers, but not in the numbers needed to kick start the economy.
Bill- I couldn't agree more. I believe we have seen the bottom or are at it now. Activity has picked up significantly in New Jersey as well. What with all the incentives for first time home buyers and the historically low interest rate, now could not be a better time to buy. Hope more buyers read this and pay attention because once it turns around your too late. Great post Bill.
Kudos Bill! I feel the same way. I'm not just going to help people get into a home this year but I am going to become a landlord too. I want some of that pie as well, lol.
Thanks everyone for all your great comments and compliments on my article about the Real Estate market improving. I hope your markets continue to improve like I am seeing here in Massachusetts. We are proably not completely out of the woods yet but the environment sure is great if you are a 1st time home buyer.
The market starts with 1st time home buyers. They will drive the rest of the market and help free up the inventory of homes.
Bill,
Our market here in Las Vegas has been halfway decent in the lower price range, as first-time buyers and investors are snapping up property at incredible discounts. With low mortgage rates, there is no better time than now to act.
Bill - Things are really starting to kick into high gear here in CT too especially for first time homebuyers. I just happened to be talking to a possible buyer last night from New York who was told by an agent there to wait another year or two before buying. No crystal ball here but I told her that even if we haven't hit rock bottom yet, there was a good possibility that a rise in interest rates would offset any further depreciation that we might see.
Bill - It seems like in some areas they may have alerady hit bottom. Other markets may have too but are just waiting for the data to prove it. Im predicting the official "bottom" will be August 2009. I think we will also start to see more and more positive media reports too. By that time, rates will be back to 6 percent.
BTW, love the RE/MAX video ! LOL
Esko - We are seeing the same thing here in Massachusetts. 1st time buyers are out in full force.
Donna - That was the correct response. It will be a gamble to wait on a purchase. If your planning on staying in the home for a while there would be no need to wait. In addition to the interest rates going up you would also potentially be building equity and would have tax benefits as well.
Chris - I though the RE/MAX video was excellent as well. Love the theme - don't be kicking yourself for not buying a home!!
ouch! :-)
Bill.... it seems like those of us in real estate understand this the best. I will agree with you 110%, but there is still one major problem. Many people don't even have the 3.5% needed for FHA loans. And unless you can qualify for a USDA or VA loan, which can be done with zero percent down, you need money. Now, some states have already started 2nd lien loans or grants to give buyers money now and then pay it back when they get their tax credit money. I wish more states would catch on quickly..... I will say this... we could see interest rates in the 7's or 8's by the end of this year. The correction aspect... I say it will be sometime in 2011... Overall, we need to get the word out...
I lived through a market once before. When I looked back upon it, I found myself wishing I had purchased all my listings instead of selling them to others. This market will give people the same memories.
I coulda, I shoulda I wish I woulda....
kk
Hi Bill, activity has really picked up on the Space Coast of Florida, (Brevard County). It is amazing to me how many people ignore what is happening and are still listening to the media. awesome opportunities exist right now, thanks for writing something positive again!
Bill - The only thing I hope people remember - is that real estate should not be treated like the stock market. Hold on to it, want it, own it. Love the graphic.
Bill, I think we've hit our bottem - AND - people who are ready to buy need to step up to the plate. When the frenzie began here, it was after California, then Nevada - and then - Arizona.
Bill, We have not been as affected as most of the rest of the country but that was mainly because we did not have a bubble to pop. We went through something much like this back during the oil bust. I was not here then but I was going through it in Denver (two oil cities). This is the time to buy as it was back then.
Bill, glad your market has picked up. I just wish we were in a position to buy something right now because the deals are amazing. Now we need jumbo loans to become more attractive so move-up buyers can get a loan at a good interest rate.
Jeff - I am sure there are some who don't have the down payment as our country in general are very poor savers. There are far too many that have no monetary discipline.
Kristal - I know what you mean. There are some real good opportunities at the moment. Long term investors certainly have realized this fact.
Denise, Wendy, Marchel, Teri, Sharon - I hope the Real Estate markets in your respective areas continue to improve. It looks like it is going to be a very brisk Spring here in Massachusetts.
Bill - Don't know if we have hit bottom however with low rates, price reduction and the tax credit this is a good time to buy.
I can't speak for everyone, but around where I am the combo of lower prices, lower interest rates, and tax credits make incredibly good for FTHB's. The fear of the market sinking a little lower may be FAR less of a fear when compared to lower house prices with much higher rates and no tax credit. Always gotta look at the whole picture.
There is a TON of inventory still out there, but it's only a matter of time. The tax credit and other opportunities are sure showing signs in the right direction, but we do need many homebuyers who are in a position to buy to realize it now before they wish they had. I've noticed allot more real estate commercials and they're sending good messages. 50% of our towns year to date sold numbers happened in March - we're moving forward!!