Here’s a quiz…
TRUE OR FALSE:
1. Home prices have come down over 50%.
2. Over 6% of households are in foreclosure.
3. The suspension of foreclosures by major financial institutions will delay recovery of the real estate market.
The answer for each is – IT DEPENDS.
In Las Vegas, Nevada prices have come down an average of 58%. In our market area, prices have declined an average of 7% from the peak of the market until now - a very moderate number.
In addition to having the distinction of experiencing the greatest price declines, Las Vegas also has the highest foreclosure rate at 6.6%. Less than ½ of 1% of households in our market area are in the foreclosure process - one of the lowest rates in the country. Because foreclosures make up such a small percentage of households in our market, if some were suspended the impact would be insignificant.
Prices of homes have come down considerably in the last few years. Foreclosures are also increasing by an alarming rate. This does not mean, however, that there a large amounts of foreclosures today. The numbers are still relatively low overall.
What does this mean? Because foreclosures make up such a small percentage of households in our market, if some were suspended the impact would be insignificant.
It is important to recognize that real estate markets are local, that prices all over the country haven’t taken a complete nose dive, and that the market isn’t flooded with foreclosures.
We, as consumers, have been inundated with a continuous stream of negative news from the press because extremes, whether booms or busts, get attention. Five years ago, good news about the real estate market was exaggerated.
Now the statistics from the worst market in the country are generalized as if they were occurring everywhere. That’s why it’s so important for understand the complete real estate picture to separate fact from fiction.
Here’s another quiz:
TRUE OR FALSE:
Now is the best home buying opportunity of a lifetime.
The answer for the real estate marketplace is TRUE!
Here’s why:
1. The Market
We have clearly seen the bottom of the market. Unit sales have dropped after the April 30, 2010 expiration of the home buyer tax credit, but annual sales have been stable for three years.
2. Interest Rates
Interest rates are at generational lows. It is hard to believe they will go much lower, and they will definitely rise as the economy begins to improve. We would normally think of 5.5% as a terrific interest rate but at the current rate of 4.25% is outstanding. A buyer borrowing $250,000 over 30 years will save $2,700 each year over the life of the loan. That’s a total savings of $68,000!
3. Quality of Life
It’s not unusual to hear conversations about the rent versus buy scenario. There are some advantages to renting but in reality, but buying is usually the best choice. The best communities are made up of owners who care about their properties. Owning a home is one of the best ways to take control of our future.
Houses are more affordable than they have been in years. Stable prices and incredibly low interest rates allow buyers to purchase more for their money so they can enjoy living in a house that better meets their lifestyle needs.
4. Long-term Investment
Owning a home has been the best long-term investment in our area, far outperforming the stock market. In the past ten years, the value of Philadelphia area housing rose an average of 91%, while the S&P 500 lost 22.5%.
Right now, many people are carefully considering whether or not to buy a home. Lack of confidence in the economy and the job market are holding them back. But there is only so long to wait before this opportunity ends. If life circumstances dictate a move, it’s best to act now. I can’t imagine that conditions will improve for potential home buyers in this area!
In five or seven years, you will probably be glad you bought a home, or be sorry you didn’t. It’s best to make sure you to provide them with the expertise and knowledge to make the right choice now, or else they will look back and say, “I should have.” After all, the true value of what you do goes beyond showing houses or writing contracts. It is in helping people make their dreams come true.
I invite you to comment back on this blog with your opinions, stories, etc. I really appreciate and welcome your feedback.
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