
It is quite unfortunate that almost every time you read the newspaper or turn on your television, the media is continuously pessimistic about the state of the real estate market. The media has been striking fear in buyers and sellers, as well as those in the real estate industry, for at least a year now. It's about time for that pessimism to stop. Not only is it not beneficial to the economy as a whole, but a lot of the information is skewed and inaccurate.
Rich Levin (a well known real estate teacher and writer) recently published an article in "Broker Agent News" about current trends in the market and several benefits and advantages that buyers have today, and in the near future. I'd like to share some of the highlights from his article, The Time is Now for Real Estate. If you, or someone you know, are thinking about buying real estate in the near future, you'll be happy you took the time to read the following.
"This is the type of Real Estate market that two years from now everybody is going to say, "I wish I had bought then." All the factors are lining up for the next six to twelve months to be that year. Let’s look at those factors.
Financing
"Interest rates are dropping below 6% on residential mortgage loans. Rates are seldom that low and when they have reached that level, mortgage loan rates do not stay there for long. From mid 2003 through mid 2005 rates hovered just above and below the 6% threshold, never below for more than a few months. Before that they had not been below 6% for forty years. The most likely conclusion is that mortgage loan rates will not stay below six for long. So, Buyers would be wise to be actively looking to buy and take advantage very soon."
"Mortgage money is available. Real Estate Agents and mortgage brokers from coast to coast are all telling me that there is money available with five percent down or less. The Buyers do need to have steady employment, and a reasonable credit rating. The days of Buyers needing to prove employment, have some cash on hand and credit worthiness have returned for good, hopefully. Violating those obvious principles contributed enormously to our current global financial crisis."
"Requiring stability of employment, credit and some cash is not the banks being cautious. It is the way lenders have made decisions since paper money was invented. The last ten years when those fundamentals were ignored have been the exception. Bottom line, solid Buyers can get the best rates and buy at what I believe is at or near the bottom of the market."
Inventory, Foreclosures and Pricing
"My anecdotal research from my Real Estate Agent Clients around the country is that the foreclosure properties are being purchased at a much higher rate as first time home Buyers and investors in market after market are deciding that we are near enough to bottom."
"This Buyer and investor activity will create its own momentum. As more Buyers and investors choose to buy now the demand they create will stabilize and lead to market appreciation. Are the Buyers who buy over the next year likely to be buying at the bottom of the market and benefit from excellent appreciation? Every indication that I see says yes."
"I suggest that we are at or near the bottom and the Buyers [that real estate agents] encourage to buy over the next twelve months will be forever grateful for [their] advice."
Some Considerations
"As Buyers realize that it is a good time to buy but not necessarily for Sellers to sell; demand will begin to absorb and exceed supply. Over the next year or two the additional demand is likely to lead to a Seller's market. Because of the severity and magnitude of the current housing supply this turn to a Seller’s market will likely be gradual."
"The signs of this shift are occurring now, that is, the supply of new construction and foreclosure homes are being absorbed by first time Buyers, investors, and secure homeowners taking advantage of their financial strength. This spring may be the tipping point when market activity flourishes. I believe it will."
Inflation: The X Factor
"If inflation does devalue our money then house prices, along with the price of almost all other hard goods will increase and this year’s Buyers are going to get benefit tremendously. Whether this happens or not it is time for buyers to get in the market."
First Time Buyers and Investors
"For certain Buyers it is time to get active. I am saying to anyone and everyone that will listen. FIRST TIME BUYERS THIS IS YOUR TIME! The federal government is still offering a $7,500 tax credit that is scheduled to conclude in the summer of 2009. Prices and interest rates are down. If you are employed and credit worthy you can buy with a small amount of cash out of pocket. FIRST TIME BUYERS THIS IS YOUR TIME!"
"Another group that I am encouraging to buy now is investors of residential rental property. Investors still have to do their investment analysis. They still have to carefully look at occupancy and vacancy rates. In other words, investors have to make smart, calculated buying decisions. This is always the case."
"The reason it is a good time for these investors is because the market is soft. As long as there has not been a population exodus in your community, that is, as long as people are choosing to live in your community and employment is stable, the rental property is going to sustain value. At the same time market conditions right now, with more challenging underwriting standards and only those who really need to sell putting their property on the market creates the opportunity all investors are looking for, buy low, particularly those with some cash."
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