Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
]Here is some information that is intended to help one to make a decision on what to do in this market. It gives a little history which is always valuable to know, and from the history and current statistics, coupled with one's needs. Whether to buy or to sell is really a personal decision based on personal needs, but it also helps to have some history and information. I hope this helps.
In 2002, home sales set a record – a little over 5.5 million homes sold
During that period of time the home buyers had confidence in the market
During 2007, home sales are forecast to be around 5.5 million
The difference in 2002 and 2007 is the public perception of the market
The picture that the media is painting is a picture of doom and gloom because that sells papers and magazines. That frightens many of the mainstream buyers into thinking they should hold off buying, even though they may have a need to buy now for a long term home investment, and/or to get their family settled into a home instead of a rental.
This may hurt this segment of the market in the long run, because the people who are buying today recognize that there are bargains out there, and they can go out and cherry pick to get the very best property at a great price. These are not my words, but what I’m hearing from the buyers I work with. Smart investors know they cannot predict the bottom, and if they try, they may miss it and pay more later, and not have the choice of homes to choose from that is available today. ]
They know that history has shown that stocks and the real estate market will increase in value over the long run by using a buy and hold strategy.
When the mainstream buyer gets back into the market, the bargains will mostly be gone. This happens whether the market is rising or falling, or whether it’s real estate or the stock market. The early birds make the profits and as word gets around, the public gets into the act at the top (too late).
I recall during the dot com era when the stock markets were skyrocketing, and people were quitting their day jobs to day trade. They made fast money for awhile because of the market momentum, not because of their trading skills. But then the market momentum turned and dropped so fast that these people lost their homes they had mortgaged in order to become day traders, and they ended up with nothing. This repeated itself with the would-be investors and flippers during 2005.
The stock market bounced back because of its’ cyclical nature, and so will the real estate market. The question is when will it bottom. We cannot know that answer in advance.
One statement made by a professional stock trader during that era was that he was getting his shoes shined and the shoe shine person gave him a tip on a stock. He later said that when he received the tip to buy that stock, he knew it was the time to sell. He said he sold most of his holdings and just waited until the inevitable stock market crash, and then he bought back into the market at bargain prices.
A real estate broker and investor told almost the same story about his experience in 2005. He was watching the statistics and said that when all of these would be investors came out of the wood work and began pushing up the prices of houses, he knew the end was near so he sold all of his real estate. Now he’s busy building back up his portfolio.
2007 will be the fifth best year for housing on record. However, the real estate boom from 2001 to 2005 created unrealistic expectations that homes are a short term high-yield investment. Those years created investor greed, mortgage greed, mortgage fraud, and flipping shows made for entertainment, not education, because they unrealistically portray the cost of the flipping process and the amount of expertise required to succeed in that business.
The recent rise in foreclosures has damaged the consumer confidence in real estate. However, those problems have been concentrated in the sub prime market. Mortgages are still available for buyers who qualify for conventional financing, and available at favorable rates.
The FHA is making changes and is helping first time buyers enter the market, and will provide a safer alternative for many sub prime buyers. Over the next three nears the FHA market share for home purchases is expected to triple from 4% in 2007 to 12% in 2009.
Smart buyers with bad credit are working with lenders who are guiding them to get their credit history up so they can get a good FHA loan on an entry level home.
The demographics of home buying and selling are shifting away from baby boomers and toward Generations X and Y. The Boomers are creating a demand for second homes across the country. The younger generations are emerging as a market force and will influence how real estate practitioners do business in the future.
The Generations X and Y focus on the bottom line so the four elements of time, stress, convenience and service will influence these younger consumers’ perceptions of value. Technology will be of great importance to these generations.
A little history:
1980 to 1983 Three tough years of a Buyers market. Real estate pulled the economy out of a recession. Interest rate was 15 to 18%
1983 to 1991 Eight years of a Sellers market
1991 to 1993 Two years of a Buyers market, much like it is now.
1993 to 2006 Twelve years of a Sellers market
2006 to present A Buyers market. Interest rates are low, in the 6% range, and making the purchase of a home much easier than in the years 1980 - 1983.
This is another cycle in the cyclical real estate market. It is estimated that it will take 2 to 3 years for the correction, and we are in about one and one half years of it now.
Today the buyers are more particular about the property they buy because there are more homes to choose from. They will offer less money for the homes. Sometimes they get the price they want, and sometimes they don’t. But there are enough homes around that they can find the home of their dreams if they search properly.
A buyers market such as this is not the time to sell a home. If one does not have to sell, then the home should not be placed on the market. If it is placed on the market, then the seller must understand the current market and what buyers are looking for.
They must understand that the home must be in a good location; in top condition; cue tip clean; staged, priced at the market and marketed heavily. That is what it takes to sell a home in today’s market.
Is it time to buy? Only you can answer that!
One must study the market history, the present economic conditions and statistics, and ignore the sensationalism reporting of the press. Then you will be able to make an educated decision based on your own research and your own personal needs.
Bill
Last edited by Captain Bill; 11-17-2007 at 06:08 PM..
Reason: This was written in MS Word and it caused extra tags to be added to each sentence
]Here is some information that is intended to help one to make a decision on what to do in this market. It gives a little history which is always valuable to know, and from the history and current statistics, coupled with one's needs. Whether to buy or to sell is really a personal decision based on personal needs, but it also helps to have some history and information. I hope this helps.
In 2002, home sales set a record – a little over 5.5 million homes sold
During that period of time the home buyers had confidence in the market
During 2007, home sales are forecast to be around 5.5 million
The difference in 2002 and 2007 is the public perception of the market
The picture that the media is painting is a picture of doom and gloom because that sells papers and magazines. That frightens many of the mainstream buyers into thinking they should hold off buying, even though they may have a need to buy now for a long term home investment, and/or to get their family settled into a home instead of a rental.
This may hurt this segment of the market in the long run, because the people who are buying today recognize that there are bargains out there, and they can go out and cherry pick to get the very best property at a great price. These are not my words, but what I’m hearing from the buyers I work with. Smart investors know they cannot predict the bottom, and if they try, they may miss it and pay more later, and not have the choice of homes to choose from that is available today. ]
They know that history has shown that stocks and the real estate market will increase in value over the long run by using a buy and hold strategy.
When the mainstream buyer gets back into the market, the bargains will mostly be gone. This happens whether the market is rising or falling, or whether it’s real estate or the stock market. The early birds make the profits and as word gets around, the public gets into the act at the top (too late).
I recall during the dot com era when the stock markets were skyrocketing, and people were quitting their day jobs to day trade. They made fast money for awhile because of the market momentum, not because of their trading skills. But then the market momentum turned and dropped so fast that these people lost their homes they had mortgaged in order to become day traders, and they ended up with nothing. This repeated itself with the would-be investors and flippers during 2005.
The stock market bounced back because of its’ cyclical nature, and so will the real estate market. The question is when will it bottom. We cannot know that answer in advance.
One statement made by a professional stock trader during that era was that he was getting his shoes shined and the shoe shine person gave him a tip on a stock. He later said that when he received the tip to buy that stock, he knew it was the time to sell. He said he sold most of his holdings and just waited until the inevitable stock market crash, and then he bought back into the market at bargain prices.
A real estate broker and investor told almost the same story about his experience in 2005. He was watching the statistics and said that when all of these would be investors came out of the wood work and began pushing up the prices of houses, he knew the end was near so he sold all of his real estate. Now he’s busy building back up his portfolio.
2007 will be the fifth best year for housing on record. However, the real estate boom from 2001 to 2005 created unrealistic expectations that homes are a short term high-yield investment. Those years created investor greed, mortgage greed, mortgage fraud, and flipping shows made for entertainment, not education, because they unrealistically portray the cost of the flipping process and the amount of expertise required to succeed in that business.
The recent rise in foreclosures has damaged the consumer confidence in real estate. However, those problems have been concentrated in the sub prime market. Mortgages are still available for buyers who qualify for conventional financing, and available at favorable rates.
The FHA is making changes and is helping first time buyers enter the market, and will provide a safer alternative for many sub prime buyers. Over the next three nears the FHA market share for home purchases is expected to triple from 4% in 2007 to 12% in 2009.
Smart buyers with bad credit are working with lenders who are guiding them to get their credit history up so they can get a good FHA loan on an entry level home.
The demographics of home buying and selling are shifting away from baby boomers and toward Generations X and Y. The Boomers are creating a demand for second homes across the country. The younger generations are emerging as a market force and will influence how real estate practitioners do business in the future.
The Generations X and Y focus on the bottom line so the four elements of time, stress, convenience and service will influence these younger consumers’ perceptions of value. Technology will be of great importance to these generations.
A little history:
1980 to 1983 Three tough years of a Buyers market. Real estate pulled the economy out of a recession. Interest rate was 15 to 18%
1983 to 1991 Eight years of a Sellers market
1991 to 1993 Two years of a Buyers market, much like it is now.
1993 to 2006 Twelve years of a Sellers market
2006 to present A Buyers market. Interest rates are low, in the 6% range, and making the purchase of a home much easier than in the years 1980 - 1983.
This is another cycle in the cyclical real estate market. It is estimated that it will take 2 to 3 years for the correction, and we are in about one and one half years of it now.
Today the buyers are more particular about the property they buy because there are more homes to choose from. They will offer less money for the homes. Sometimes they get the price they want, and sometimes they don’t. But there are enough homes around that they can find the home of their dreams if they search properly.
A buyers market such as this is not the time to sell a home. If one does not have to sell, then the home should not be placed on the market. If it is placed on the market, then the seller must understand the current market and what buyers are looking for.
They must understand that the home must be in a good location; in top condition; cue tip clean; staged, priced at the market and marketed heavily. That is what it takes to sell a home in today’s market.
Is it time to buy? Only you can answer that!
One must study the market history, the present economic conditions and statistics, and ignore the sensationalism reporting of the press. Then you will be able to make an educated decision based on your own research and your own personal needs.
Bill
It may very well turn out to be true. A lot of seasoned people do claim it's best to buy when others sell and sell when others buy.
No the difference between 2002 and 2007 is that in 2002 a person could buy a home with 22% of their monthly income and in 2007 a person can buy a home with 77% of their monthly income.
But imagine a realtor encouraging them to buy anyway...
Captain, Once again you have delivered an insightfull message to the masses. The record does show that so many people move into the market when they should be moving out. Many of the people that I know were very knowledgable about the market during the last few years. They would smother me with there knowledge that was gained by seling a home and purchasing another. They just timed the market I guess. One friend ended up with seven homes. He figured he was an astute investor that was very sophisticated in his investments. Turns out that he is now trying to unload all the properties and may end up giving some back to the bank. I kept telling everyone that this market was too crazy for me and that I didn't understand how a person could afford to buy a home and pay a 1% mortgage. But then I just wasn't sophisticated like they were. Your words reminded me of a story I read in a book several years back.The author was speaking about an expereince that he has when the silver market was going through the roof. He had purchased silver as part of his investment strategy. When it was near the amount that he figured was overpriced for silver he took it to a broker to unload it. When he got there many other people he figured had the same idea. Turns out that those people were not there to sell silver but to buy silver. When the broker ran out of silver the author of the book was able to unload his investment to the people that were there to buy. Another story is when the Rockafeller family placed the Rockafeller center on the market. Some Japanese investors bought the place. Not too many years later they sold it back for $100 million less than they bought it for. As fas as I can see this is a great market for real estate. I have never seen so much available stock for a long time. I wish I could buy a dozen homes.
I'm glad you summarize today's Real Estate Market. I read a book by David Lereah called "Are you Missing the Real Estate Boom". You are on the dot about the perception and how it plays with our market today. When I get into a conversation with others on what I think about the Market, I always bring up the Cycle that David described in his book. They look at me with amazement and then I continue on telling them of statistics that they can pull off the internet that shows the census of the Market.
Location: Sunny Phoenix Arizona...wishing for a beach.
4,300 posts, read 14,953,825 times
Reputation: 813
I say buy as long as you can afford it. I'm not going to buy anything where the bottom can be a long way down. Many people were told to buy 6 months ago and that hurt some people.
I am really happy that we bought and not rented. Buying gives you a sense of ownership of course. I think Arizona's problem is #1-The housing boom hit hard a few years ago, and people were buying these outrageously cheap houses, thinking they would be able to sell their house, then of course they couldn't sell their existing house, and were stuck with two mortgages that they couldn't afford. #2-The recession hit at the same time. It was a two fold hit for Arizona. Personally, I'm not worried at all. But at the same time, I know that a lot of my neighbors spent $100,000 more than I did on the same exact house. (Yep, they were part of the lottery a few years ago, while we were able to buy a spec home that had all of our needs, and closed in less than 30 days) I have time to just sit here and wait it out, that's why we bought. We plan on being here for a while, and if for some reason we do move, we'll hang on to the house until the market rebounds.
Isn't that like asking "What came first, the chicken or the egg" ?
Interest rates are low, so I'd say it's a good time to buy, which will subsequently cause more people to sell.
As far as I know the chicken came first. I looked in my dictionary and there it was plain as day.
I do agree though, how does anyone know what will happen? Things change in a blink of an eye. I do think that over time the market will recover. (after it drops more?) Eventually confidence will increase, people will slowly start buying and in no time the prices will be back up and everyone that buys will start to think that they are an expert on real estate because they made this amazing decision to buy something that icreased in value. Not too much more time will pass and banks will start encouraging the masses to take out a loan on there equity and have a killer vacation, buy a car, spend it on your daughters wedding, anything to seperate you from your money and to place you more deeper in debt. I love the home we are having built. I will still love it if it decreases in value. My plan is that 20 years from now I will still be in that same home. I am thiing that in 20 years home prices will have increased somewhat. But then maybe not. At least it will be paid off and my wife and I will see what happens from there.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
