What are you waiting for? It is a great time to buy real estate in Raleigh
Too many potential buyers are on the sideline waiting to make their next home purchase, but the question is why? Are you concerned that the market has not yet bottomed out? Are you concerned that you will buy a home today and it will be worth less in six months? Are you concerned about being upside-down with your home (owing more then the home is worth)? Fear not, I will attempt to answer these and many more questions for you.
When asked, the potential buyers today have many different reasons why they have not made the final decisiont to buy a home today. Usually, I find that they still do not have a down payment or they need to get their credit scores higher before purchasing. It is a rarity that someone specifically states that they are concerned that the market has not yet bottomed out. Others have told me that they are waiting to see what happens with the mortgage industry. Others have noted that they have homes to sell in other parts of the country before they can buy a home in Raleigh or the Triangle area. This is usually the number one reason why buyers are still on the sideline. They have a home to sell first.
Let's talk a bit about the market and whether or not it has "bottomed-out" This is a term that has been overused in the media as a means to sell newspapers or get viewership. There is not a bottom in these terms. The market is what it is and it will adjust based upon supply and demand. If there is a higher demand, the price will go up. If there is low demand, the price will go down. Plain and simple.
It is a simple rule, but also a complex one. How do we determine if the demand is there? First of all, we realize that real estate is local. What is happening in California, Florida, and Nevada does not directly impact our market in Wake and the surrounding counties. They are having issues because the supply is higher than the demand and thus, the price has dropped dramatically. In the Triangle, we have not seen this trend as much. Currently, we have a surplus of supply in most areas and price ranges, but this is more due to buyers waiting to buy than to the buyers not being there. Our potential buyers are paying too much attention to the national media and this is causing them to sit on the sideline and wait. This waiting has caused the Triangle to experience a shift from a seller's market to a buyer's market, which is a direct result of the supply and demand rule of economics.
In the Triangle, we have not seen prices fall dramatically as many other markets around the country since we did not see the dramatic appreciation that these parts of the country saw. We showed steady growth and should see appreciation again this year. This year's appreciation will not be as great as it has been in the past, but it should still be positive. As for the supply, we currently have 17,919 single family homes for sale in the Triangle MLS. This is by far, the largest number of available homes than at any other point in our history. I feel that this is the result of 2 major trends. First of all, we have a larger population than we have ever had in terms or residences and single family properties in Wake and the surrounding counties. With the record number of single family homes, it stands to reason that we will have larger number of them for sale at any given time in the past 5 years. Secondly, we are begining to see more distressed homeowners in our area that have to sell before the bank takes their homes. Currently, there are 171 foreclosure homes listed in the Triangle MLS, this does not take into account the numbers that are in the begining stages of foreclosure or will be within a few months.
Some potential buyers are concerned about buying a home and having it depreciate when they look to sell it. This is not a major issue in our area. Usually this only happens when an individual gets a mortgage for 97% to 100% of the home's value and then, due to personal life changes, has to sell within a year or two. Real estate is not designed to be a short term investment tool, but rather, a long term one. With a 97% loan-to-value ratio, a home can still see appreciation of 3% to 5% and still owe more when they sell due to closing cost. Closing cost can be as much as 7-8% of the home's value. Unfortunately, there is not much that can be done for these folks with the exception of trying to get the greatest home value for them.
What is the best way to get the greatest sales price? Simply, marketing, marketing, and marketing. The better the marketing is for your home, the more traffic that will result from this marketing. The more traffic you get into your home, the more interested buyers you will have in your home. Thus, the greater sales price you should obtain.
You may be concerned about buying a home at this point and concerned that you will overpay for your home. A very simple way to look at this from a purely financial way. Many economist expect our economy to recover within six months or after the Presidential elections. The first thing the Federal Reserve does when the economy improves it to raise the prime rate, which will cause the mortgage interest rates to increase. So, hypothetically, you could purchase your home in six to nine months for maybe $10,000 less than that home may be selling today, but actually have a larger payment due to the higher interest rates that are being charged by the banks. Last week, the rates for a 30 year fixed mortgage was about 5 7/8%, this week, they were reported at 6 1/8%. Can you really afford to wait to buy your next home?
When asked, the potential buyers today have many different reasons why they have not made the final decisiont to buy a home today. Usually, I find that they still do not have a down payment or they need to get their credit scores higher before purchasing. It is a rarity that someone specifically states that they are concerned that the market has not yet bottomed out. Others have told me that they are waiting to see what happens with the mortgage industry. Others have noted that they have homes to sell in other parts of the country before they can buy a home in Raleigh or the Triangle area. This is usually the number one reason why buyers are still on the sideline. They have a home to sell first.
Let's talk a bit about the market and whether or not it has "bottomed-out" This is a term that has been overused in the media as a means to sell newspapers or get viewership. There is not a bottom in these terms. The market is what it is and it will adjust based upon supply and demand. If there is a higher demand, the price will go up. If there is low demand, the price will go down. Plain and simple.
It is a simple rule, but also a complex one. How do we determine if the demand is there? First of all, we realize that real estate is local. What is happening in California, Florida, and Nevada does not directly impact our market in Wake and the surrounding counties. They are having issues because the supply is higher than the demand and thus, the price has dropped dramatically. In the Triangle, we have not seen this trend as much. Currently, we have a surplus of supply in most areas and price ranges, but this is more due to buyers waiting to buy than to the buyers not being there. Our potential buyers are paying too much attention to the national media and this is causing them to sit on the sideline and wait. This waiting has caused the Triangle to experience a shift from a seller's market to a buyer's market, which is a direct result of the supply and demand rule of economics.
In the Triangle, we have not seen prices fall dramatically as many other markets around the country since we did not see the dramatic appreciation that these parts of the country saw. We showed steady growth and should see appreciation again this year. This year's appreciation will not be as great as it has been in the past, but it should still be positive. As for the supply, we currently have 17,919 single family homes for sale in the Triangle MLS. This is by far, the largest number of available homes than at any other point in our history. I feel that this is the result of 2 major trends. First of all, we have a larger population than we have ever had in terms or residences and single family properties in Wake and the surrounding counties. With the record number of single family homes, it stands to reason that we will have larger number of them for sale at any given time in the past 5 years. Secondly, we are begining to see more distressed homeowners in our area that have to sell before the bank takes their homes. Currently, there are 171 foreclosure homes listed in the Triangle MLS, this does not take into account the numbers that are in the begining stages of foreclosure or will be within a few months.
Some potential buyers are concerned about buying a home and having it depreciate when they look to sell it. This is not a major issue in our area. Usually this only happens when an individual gets a mortgage for 97% to 100% of the home's value and then, due to personal life changes, has to sell within a year or two. Real estate is not designed to be a short term investment tool, but rather, a long term one. With a 97% loan-to-value ratio, a home can still see appreciation of 3% to 5% and still owe more when they sell due to closing cost. Closing cost can be as much as 7-8% of the home's value. Unfortunately, there is not much that can be done for these folks with the exception of trying to get the greatest home value for them.
What is the best way to get the greatest sales price? Simply, marketing, marketing, and marketing. The better the marketing is for your home, the more traffic that will result from this marketing. The more traffic you get into your home, the more interested buyers you will have in your home. Thus, the greater sales price you should obtain.
You may be concerned about buying a home at this point and concerned that you will overpay for your home. A very simple way to look at this from a purely financial way. Many economist expect our economy to recover within six months or after the Presidential elections. The first thing the Federal Reserve does when the economy improves it to raise the prime rate, which will cause the mortgage interest rates to increase. So, hypothetically, you could purchase your home in six to nine months for maybe $10,000 less than that home may be selling today, but actually have a larger payment due to the higher interest rates that are being charged by the banks. Last week, the rates for a 30 year fixed mortgage was about 5 7/8%, this week, they were reported at 6 1/8%. Can you really afford to wait to buy your next home?
posted by Steven W. Nelson at 7:44 AM
0 Comments:
Post a Comment
<< Home