State of the Real Estate Market
Many of you have asked questions about the CURRENT REAL ESTATE MARKET.
So here are some answers to those FAQ’s.
1. How bad is it?
Considering that 3% of homeowners are not up to date on their mortgage and 97% are current, this represents a small number of borrowers getting all this negative publicity about loan defaults. However, when I shared this statistic with a client and bank owner, he explained in order to be profitable, his bank needed to keep defaults below 1% of their loan portfolio. From a lending institution’s viewpoint, 3% could yield a devastating blow. Lenders that have practiced conservative lending guidelines are still in business strong as ever and ready to serve you. It is a buyer’s market and with inventories up, it will most likely continue for the next several months. It is all about the law of supply and demand: buyers don’t feel confident because of the negative publicity (when this is exactly the time they should be buying!!) so they pull back. Many sellers are overpriced and lingering on the market so the supply of homes continues to increase.
2. What do we have to do to be successful buyers and sellers?
Sellers: This downward market is new to most Realtors in our area. Even though we have seen tough times in the past, our real estate markets always faired well comparatively. This is different. And therefore outcomes are not predictable. In an upward market, we could anticipate pricing at a slightly higher level – say 3-5% above market indications – knowing that inflation and appreciation would eventually catch up, especially since supply and demand kept our inventories relatively low. Lately, we have been successful pricing our properties at 3-5% below market indications, resulting in offers close to, or at, full price. Given that properties sell at an average of 3% below list price, getting in at a competitive edge and well priced, has been a huge advantage. It is imperative to be realistic about pricing.
Get pro-active about your property. It is extremely important that your property be in top condition. There are some great shows on HGTV on Sunday morning and on weekday evenings such as “Design to Sell” and “Get it Sold”. I recommend that you take some time to watch them for tips and ideas to get your home ready to be SOLD. Additionally, we have a home stager on the Team, Cindy Black, who can assist you, if you feel clueless as to where to begin. Two years ago I could sell a house needing carpeting or removal of wallpaper – today it is a lot tougher. Buyers will not pay market price for a home that has not been updated. They are only buying new homes or a home that looks like new. The do not have to settle for less in this market.
Buyers: The ball is in your court! If you are not actively looking for opportunities, in a few months you will be lamenting “another one got away”. Be prepared to pull the trigger if you see a home that strikes you as a good value, be prepared with financing in place, and be prepared to act in a timely manner for a quick closing. This buyer’s market is temporary. You have some excellent choices and can find the perfect home with the large inventory we have available! The Midwest markets are the last to feel the pinch and the first to rebound. This market is especially excellent for first time buyers with good credit. The move up buyer has the most to gain in this market – while you might experience a loss in value, back to 2005 prices, on the selling side but you should gain $30,000+ when you buy up! Think about investing in real estate as a long term investment, maybe you could pay for your children’s college education or for your retirement. Take advantage of this rare opportunity. Things are not that bad!
3. So where do you see the Real Estate market going in the next five years?
Please contact us and we will provide you with information taken from a recent commercial appraisal that identifies the growth expected in this area. This is excellent news for both Buyers and Sellers! We can also provide you with data of third and forth quarter property sales of the last four years. In the third quarter of 2006, our market started to take a significant downturn which has not leveled out yet in 2007. We are experiencing fewer transactions and lower sales volume, and the average selling prices continue to drop slowly!
Anyone wanting more information about their specific market, please don’t hesitate to call. Now more than ever, you need AN EXPERIENCED, FULL-TIME REALTOR! This time calls for INFORMED DECISION MAKING. Perhaps this is not the right time for you to be selling. It most definitely is not the right time to be “testing the market” to see if there is someone out there crazy enough to give you the price you want.
This is the time to reach out to our neighbors that are in need. When your neighbor loses his job, it is a recession. When you lose your job, it is a depression. There are some really sad stories out there. Market correction experiences are hard everyone. Approximately 20% of Realtors have left the business already. The strong will survive. Things here are not as bad as the press portrays. The well situated homes, updated, clean and priced right are selling. We are lucky that we are in the Midwest where the highs and lows are not so great.
And we are especially lucky because all of you have been so good to us. THANK YOU!!! In this tough market, we need you more than ever. Please continue to refer us to your family and friends. As EXPERIENCED REALTORS we can save you time, money and heartache. Let us help you avoid the most common pitfalls. Your past and future support is greatly appreciated.
Call us 913-338-8429, Toll Free 877-PAT HILL, Email us hillteam@kc.rr.com