Archives for February 14, 2012

Real Estate: How’s the Market?

Inevitably in the course of meeting new folks, introducing myself, or even just wearing my RE/Max of Greensboro name badge, I get asked what I call The Question.  We all get them, no matter what we do.  I’m sure that police officers have a question they get asked every time someone finds out what they do (“Arrest anyone today?” is the first one that comes to mind) and doctors always get asked about some ailment.  I bet everyone’s career choice has a question that always gets asked.  I always get asked The Question- “How’s the market?”  Too bad I can’t answer that question.

OK hold on now.  Yes, I am a Realtor.  Yes, I work in real estate full time.  No, I don’t have another job doing something else.  Yes, I’ve been doing this for 12 years.  Hang on.  You don’t understand — when you ask that question, I can’t answer it.  Not for lack of knowledge or experience, but because I don’t have enough info.

Most people don’t realize that there are two markets, commercial and residential, for Realtors and in each market, there are divisions of that market.  And in each of those divisions, there are specifics to each.  So when I get asked “How’s the market?” I don’t know enough to answer the question.  You’re probably thinking (if you’re still reading this and didn’t fall asleep after you read the headline) “this guy’s a real smart aleck” and you’re right — I am.  But seriously, I don’t usually get enough information to properly answer the question.  But once I get the right information, I can answer The Question — depending on what you as a consumer are interested in.

Since I do mostly residential renting and sales, and that’s usually what people care about and are most directly affected by, let’s focus on just that: residential.  OK, now unless you’ve literally been living in a cave (and seriously, some people have been reduced to that these days) you know real estate is in the headlines constantly.  Depreciating values, loss of equity, foreclosures, short sales, you name it.  It makes it seem like there’s only bad news.  But in reality there’s bad news in only one of the four divisions of the residential market. Yes there are really four distinct markets within the residential market: buying, selling, leasing, and investing, and three of them are doing OK.  Let’s talk about them, shall we?  Yes, let’s.


Selling: Yep, it’s a tough time to be a seller.  Perhaps you’re under water on your mortgage, meaning the house is worth less on the open market than when you bought it.  Maybe you tried to refinance and you found this out the hard way.  Maybe you have to sell and you really can’t.  It’s not pretty out there.  This is the market that is the toughest — trying to sell to get your mortgage paid is not easy right now.  If you have no equity and you sell, you might be bringing money to the table to make up the difference.  I helped a buyer recently purchase a home where the seller had to bring almost $30,000 to the closing table in order to close.  And that hurts.  Or maybe you want to sell but due to your payoff you just can’t.  I can’t give you advice without knowing your personal situation, but I can tell you one thing — this, too, shall pass.  Yes, we’re bumping along the bottom of the market and there’s only one way to go — back up.  We won’t see a rapid appreciation but with less inventory and buyers slowly creeping back into the market (those low interest rates are helping!) we may see an increase in appraised values due to that increasing demand.  In some areas of the Triad we’re already seeing a slight increase in the pricing.  And some areas have held their own as far as pricing goes but have definitely increased their Days on Market.  But even that may shrink in the near future.  Hold on, it’s coming.

Buying: Oh, boy.  You never hear about the buyer’s market at all in the news.  It’s all gloom and doom out there in medialand.  But you know what?  It couldn’t be a BETTER time to buy than right now.  Seriously.  Prices are dirt cheap — like 1990 prices out there.  Interest rates are again below 4%.  FOUR PERCENT.  My first house was at 8.5% and I was lucky to get it.  Right now, you can buy for less than you can rent the same home.  In some cases you can get a home and pay less than half what you would pay in rent.  And with the instability, it means you can get a deal out there (that’s the second most frequent question I get asked, by the way — “can you find me a deal?”).  There are more desperate sellers out there than ever before, pricing is lower than it’s been in 20 years, and more foreclosures and short sales than ever before.  So if you’re in the buying market, guess what?  It’s a great market!

Investing: OK, so you have the means to do what you’ve always wanted to do — buy a few houses, fix them up, and rent them out or resell them.  You should have the means already, i.e. cash, because the bad news is there are few loans out there for investors over 75% to 80% loan to value.  But if you have that 20-25% or cash to play with, now’s the time.  The good news is that since less folks are buying, more folks are renting and there’s always a need for quality housing. And with prices as low as they are, it’s a great time to get in on the ground floor opportunity that is real estate investing.  You can get a home so low, do the work on it, and “flip” it and still sell it quickly if you price it aggressively to compete with those poor sellers who are under water and can’t move theirs.  And worst-case scenario, you can always rent it.  There are plenty of folks who have a house to sell somewhere else and until they do, they gotta rent.  So this market is great as well.

Renting: Most people don’t see this as a market — most folks are only concerned with buying and selling.  But if you aren’t ready to buy, or you plan to be in the area less than three years, there’s probably no reason to buy yet.  I always recommend buying over renting but if you’re here temporarily you may not want to.  Or maybe you need to work on your credit or save for a down payment.  If there’s a way, buy now.  But if you aren’t ready for some reason, good news — there are also more homes for rent right now than ever before.  With folks unable to sell their current homes before they can buy, they may put the house up for rent.  And since there’s more inventory, not only do you have more condos, townhomes and single-family homes to choose from, in some areas the rents may be decreasing due to a glut of rentals on the market.  So you may be able to negotiate a lower monthly rent or even a lease-purchase.  So it’s a good time to be a renter.

See, it’s not all bad news out there.  Yes, it’s hard out there for a seller but it’s great out there for a buyer, an investor or a renter.  If you’re one of the lucky three, congrats!  Get out there and make it happen!  If you’re unlucky enough to be a seller right now, hold tight — rent your home, hang on to it, even do upgrades to your current home until the market comes back.  And it will.  It always does.

Related Posts Plugin for WordPress, Blogger...