The Current Market
The media feeds us with bad news everyday, including news about the Real Estate market. The media says it's a terrible market and the bubble burst, but they don't give actual data or numbers to support their claims. IF they looked at the real numbers, they would be reporting that it is a normal market with homes selling and people buying. But that sounds boring, so why would they want to report that. They don't, the media only reports the extremes. If the media started interviewing full-time agents, like the Avalon Team, they would get the real story. Homes are selling and people are buying. Luckily, every once in a while the newspaper puts out stats on the Real Estate market. Like the article a couple weeks ago that showed all the zip codes and their appreciation from 2002-2007! It was awesome! Homes appreciated at record numbers like 70%-110% in those 5 years. Then they showed the depreciation from 2006 to 2007. Homes in some zip codes appreciated 3% and some were only negative 5%. If you look at those numbers, the Real Estate market is great! It is a great time to buy, because prices are competitive and there is a lot to choose from. You can get whatever you want in a home right now. Why wouldn't you buy? Now is the time to invest in Real Estate and your future.
5 comments • Avalon Team • November 13 2007 11:16AMComments
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Fundamental demand for homes based on job, population and income growth has not gone away – it is still there and will remain until the next recession when job and income losses will reduce the number of people who can afford to buy homes and make the full payments required.
The demand that evaporated starting in 2006 was the unsustainable froth of demand fueled by low teaser rate loans. Unfortunately, the collapse of that demand, and the sales and home construction that went down with it, damaged the economy, pushed it close to recession, and made many potential homebuyers nervous and fearful about their futures and thus unwilling to commit to a home purchase. Also, for a number of years, future fundamental demand will be lower than it was before the boom because home prices rose so high during the boom; because price almost became irrelevant when you could get a low-teaser-rate mortgage.
It will take years of household income growth and home price declines to bring incomes up to the level where they can pay the payments for a fixed rate loan, which is the new standard. Getting low teaser rate loans without proof of enough income to pay a fixed rate payment is gone for years. And, hopefully, forever. A recession will delay reaching that point of affordability even further.