Would I buy real estate now? You betcha!
March 2, 2010 – 10:46 am
A 3 foot Shark at Folly Beach
For some odd reason I woke up thinking about fishing strategies. Expert fishermen study all of the trends of weather, currents, bait, etc to make informed decisions about when and where to find the biggest catch. But even with all of their expertise, they still have to wait for the fish to take their bait and time it just perfectly to hook them. Too early and you scare the fish away. Too late and you’ve lost your bait.
Buying a house can be like that too, especially in today’s weird economic climate. Just when you think you know what the market is going to do, it swings up or down without warning. But smart Realtors are like fishermen. They study and watch and wait until more signs point in one direction than in another. Here’s what I’m sharing with my buyers and sellers:
- Interest Rates All of the economic indicators predict that rates will go up very soon, perhaps in the next month or so. Bernanke is trying to hold back the floodgates but the inevitability is in front of us. China is no longer buying our debt and we cannot continue to shore up our own Treasury Bond Market indefinitely. Unless the administration can pull a rabbit out of its hat, I expect interest rates to begin climbing at a fast clip by mid-summer.
- Prices Believe it or not, average prices in our area have dropped to a point where they are now teetering around a bottom. For the last six months the average prices of homes sold on James Island have climbed $32,000.
August 211,244
September 212,532
October 183,844
December 296,078
January 241,705
February 243,092*
- Tax Credits We are now on the home stretch of the $6500-$8000 tax credit. Nothing from the FED indicates that it will be continued. Contracts must be ratified by April 30th and closed by July.
- SPRING We can’t help it. No matter how logical we try to be, it is our very human nature to “nest” in springtime. FACT: For the last 100 years, (on average) more houses have sold between March and July than any other time of the year.
- Financing Given the current climate of stated-income financing available, there continues to be fewer investors buying. The financing just isn’t what it used to be for them so they are left making more cash deals than loan deals. As one investor told me at the auction, you can only do that so much before the cash runs out and then you run out of buying power.
Factors that might swing the market in another direction:
- Foreclosures and Job Loss I do not think we’ve seen the full impact of either of these. Both will bring down prices. Foreclosures will increase the home inventory and Job Loss will shrink buyer demand. Question is, by how much? Only time will tell.
- Short Sale Process For six months we’ve seen banks struggle to handle the tsunami of short sales. Most banks HATE these and process them at a snail’s pace, preferring to foreclose so they can collect the Mortgage Insurance and cover their losses. Arithmetically it doesn’t make sense but who ever said that American capitalist banking makes sense.
By now your head is probably spinning much like a novice out on a deep-sea excursion. Never fear, your Realtor is here. It’s my job to understand all of this and use it to help you make the right decisions.
The bottom line question I’ve been asked a lot lately: Would I buy now? The answer: yes!
Why? Because I treat real estate as it should be treated, as a long term investment in my own future and yours.
Happy day,
If you’d like help navigating the Real Estate Market, give me a call at 843 276-1618!
Trust ~ Reliability ~ Integrity ~ Service ~ Heart
*Stats courtesy Dan Mengedoht, Carolina One Real Estate
