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IS IT A BUYER'S MARKET OR A SELLER'S MARKET?
By: Bo Goodson, ABR, CRS, Broker/Owner of The Goodson Group
With all the media "hype" it is very hard for most consumers to know about the real estate market and to determine if it is a good time to sell, a good time to buy, or even a time to sit and watch the market and not move at all.
I am going to share some wisdom I have gained over the past 30 years in the real estate business. First, every market is unique and different. What is happening on the west coast with real estate has very little to do with our own market.
Second, don't believe what you hear or read. Headlines are meant to do two things: get our attention and sell advertisement to people who want our attention.
For example, we are selling almost a many homes as we were selling last year. Our interest rates for long term financing have actually improved since last year. When the Feds cut the prime rate by 50 basis points recently, our interest rates went down significantly. This opens the door to homeownership to many more buyers. Seller of homes in our local market in July and August were able to obtain 95-96% of their asking price, which is as good as any market can get before being inflated as most of the rest of the country saw in the last two years.
The old adage "what goes up has to come down" has held true in Florida, California and Nevada. Contrary to those areas, our average selling price has gradually gone up over the last three years, which is good news to homeowners that invest in homes over the long term. Real estate has been a steady performer, out performing the stock market, the bond market and the mutual fund market. Our local market has been studied by AUM and The University of Alabama Real Estate Research Institute and has been determined to be "boom-proof" and "bust-proof".
In 2008, then- President Bush had signed into law an FHA initiative that will enable homeowners throughout the country who purchased homes with ARM loans (adjustable rate loans) to refinance to a fixed rate without the normal guidelines, if their loans have increased an abnormal amount recently and has put the family in jeopardy of losing their house. Local lenders have received the information concerning this plan.
Secondly, Congress is now considering raising the maximum loan limits for all types of government backed securities, which will help more people obtain reasonable rate financing without the wide fluctuations in their rates over the term of their mortgage.
Additionally, with the current crises the mortgage industry is experiencing, credit guidelines will return to more normal and realistic requirements, which should stabilize the market price.
With the exit of the "sub-prime" mortgage market, the reputable, reliable mortgage companies will survive this "crunch" and be stronger as a result.
The "fly-by-night" mortgage companies throughout the country have folded their tents and hopefully will not be back. Over the last three years, these practitioners have caused many problems.
Now for the answer to the question, "Is it a buyer's market or a seller's market?"
We now have a buyers market since we now have more than 3000 homes on the market in a tri- county area. Last year, we had over 3200 homes on the market. It will take some time for the market to correct itself and absorb the inventory. Nationwide experts agree that it will take about 18 months to fully stabilize to more normal market conditions.
Is it a good time to buy? Yes, because buyers now have a larger inventory to choose from and some sellers who have to move have been offering very attractive terms to buyers. Examples include no closing costs for the buyer, and price incentives that would have been unobtainable in our "hot" 2005-2006 market.
As I mentioned earler, sellers who price their homes properly are obtaining a fair price for their property and are able to sell in a reasonable market time of 90 days or less. For more information about our local market contact our office at 551-0225 or email me at firstname.lastname@example.org
Bo Goodson, ABR, CRS, is a Broker with The Goodson Group, 8307 Crossland Loop, Montgomery. He also owns the Bo Goodson Real Estate School. He may be reached at 551-0225 or his cell 221-2883 or email email@example.com