The foreclosure mess, rising interest rates and continued job insecurity don't bode well for RE in the next few years from a seller's perspective.
However, buyers who are financially capable may find home prices to become increasingly affordable. Rising interest rates may take away purchasing power but if home prices continue to drop as a result it may actually benefit buyers. Mortgages can be refinanced down the road but the purchase price doesn't change. During the years of double digit interest rates many people made out very well because they were able to buy properties for rock bottom prices and when the interest rates came back down, they were able to refinance at a much more attractive rate.
This article from the New York Times sheds more light on the issue for New Jersey. Note, according to the article, New Jersey has the country's highest backlog of Shadow Inventory.
A â€˜Shadow Inventoryâ€™ Dampens Winter Market
The sun shines on some communities more than others. Real estate value, though, is affected in large part by what is happening in that community.
But national trends can't be ignored. National trends affect consumer confidence and enthusiasm. Even developments internationally can push down mortgage rates. BTW: The rate are lower this week because of what is happening abroad.
Here in Boulder County, Colorado, values have held and sales are seeing increases here and there. Inventory is thinning.
The city of Boulder has fared well against strong national currents, including the downturn in real estate. What should that tell you about the prospects for Boulder and Boulder County?
The story here: Stable community grounded by a university, several gold plate corporations and federal agencies coupled with unusual entrepreneurial zeal. Key industries: aerospace, high technology, energy and research. Newer activities are taking hold, including a battery maker for electric cars as well as alternative energy technology. NASA will announce any day now the location for an aerospace technology park. Conoco-Phillips is bringing a massive research facility to the area.
National trends are driving these local developments.
Naturally, sellers are going to wait for these strong economic influences to boost home prices and sales. A developer is looking at bringing a massive home project to a corner of the county nearest the two largest transportation corridors.
We're enjoying the sun here.
PML of Longmont, CO
The question doesn't ask if anyone KNOWS if the residential market is trending upwards, rather Gershon appears to be seeking an opinion.
And real estate agents certainly have plenty of those.
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
That being said, no one has a crystal ball and we can't foresee the future. We can answer what has been going on over the past month, 3 months, 6 months, etc. Past gains are not necessarily indicative of future returns. If you want my opinion on a national basis, I think home prices have stabilized and will remain mostly flat for the next year or two. Nearly 1 in 3 homes on the market currently are either short sales or foreclosures. That number doesn't seem to be reducing either. In Real Estate, it is called a "shadow market" or "phantom market" in that many of the homes that are in foreclosure are not even on the market yet and may not be on the market for a couple of years.
Does that mean that now is not a good time to buy? Absolutely not! Now is a great time to buy!
1) Housing prices are low and look to have stabilized. Your risk of losing money is small. (again, confer with a local agent regarding local trends. Your area may not be "out of the woods" yet.)
2) Interest rates are still low.
3) Economists are starting to use the "inflation" word, and some are even talking about the possibility of "hyperinflation". When this happens, interest rates will likely rise significantly. For every $100,000 that you mortgage, a 1% rise in interest rates increases your mortgage by over $60 per month. While that not sound like much for a $100,000 loan, consider someone buying a $350,000 home. That will mean the difference of more than $210 per month.
4) The average annual appreciation of real estate over the past 30 years has been 6%. This includes down markets and up markets. Given this number, down years have to be offset by up years, and there have to have been more up years than down. This bodes well for housing prices going out a few years.
5) If you are an investor, there are deals out there to be made.
I hope this answered your question. If you would like more local opinion, contact a local real estate agent.
Because it's more than real estate. It's RAYL-Estate!
Brian Rayl, REALTORÂ®, e-PRO, SFR
Keller Williams - Dallas, TX
If you are asking this question for a specific area please provide the zipcode.
In my area of Long Island, we have a section that was one of the first ones that started to be torn down house by house to put up McMansions, as we so affectionately call them. Prices had dropped to the $1.7 to $1.8 million range, but I see that one just closed for $2.2 million, and not in the most perfect of locations either.
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