You can’t over estimate the importance of learning the micro market when it comes to buying or selling real estate. The performance of the market in a given neighborhood will have everything to do with your decision to act. But if you keep your eye on the regional trends you can prepare yourself to make a move when the time is right in your local market.
There are very strong signs of improvement in several metro areas as well as in some smaller communities. In fact, according to the National Association of Realtors (NAR) in their report released last week, most metro areas are showing sings of price stabilization. A total of 78 markets showed price GAINS in the 4th quarter of 2010 over 2009. Existing home sales were up as well, by 15.8%. While these numbers are not overwhelming, they are significant. “Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down,” he said. “A recovery to normalcy requires steady trimming of the inventories” says Chief Economist Lawrence Yun at the NAR. Yun also says an improving housing market and job growth go hand-in-hand. Housing recovery will lead to faster job growth: “Better than expected sales and/or strengthening in home values can have an even bigger job impact as consumer spending would naturally rise from a housing wealth recovery affecting a vast number of American families.”
For investors, a rebound in the housing market spells opportunity with a capital “O”. They stand to see huge gains on long term investments. But what does this mean to the average consumer? It means the economy is on the right track and things are looking up. There’s hope for sellers who may experience some recovery of their equity with a spike in demand. For buyers, the time to act could be sooner than later. If you expect to act only when the bottom is reached you may never act or act later than you should have (interest rates and rising rental rates should be a significant factor in your decision). You want to have a general idea where the prices are headed, but you can’t expect to find the bottom due to the extremely local nature of real estate markets. Buyers should plan to stay put for a few years at least, and minimize risk by understanding the local market and getting a fair price.
Above all, seek professional advice from a lender and a Realtor. A professional lender can help you determine what you can safely afford, and a Realtor can help you secure the right property at a fair price.
Kipp Blackburn | Real Estate Consultant | m 312.730.3320