by Mary Bryan Fields
At last, news media from around the country are reporting positive trends in the real estate market. The general consensus is that the real estate recession is over. If you’ve been waiting for the bottom to invest in real estate, the time to buy is now. But, don’t take our word for it!
Economists and other experts, such as CNBC’s Cramer, are saying that residential real estate has finally found a floor. As Cramer told CNBC viewers in June, the sector’s long, steep descent is all but over. According to a June 16th article posted on the web by Tom Brennan, “New housing data reported today indicates a dramatic change for the better. The latest news, along with much lower prices and the working off of inventory, validate (Cramer’s) prediction that housing would stabilize this month.”
Among other encouraging statistics, the National Association of REALTORS’ Pending Sales Index, a forward-looking compilation of signed or “pending” contracts, has increased seven months in a row… a winning streak not seen since 2001! The last data available confirm that pending contracts were up 6.4% in August 2009 over July 2009.
Many parts of the country are reporting stabilizing prices amid increased sales. According to RealtyTimes, “In September, sales increased 8.2% in the Northeast, 7.6% in the Midwest, 1% in the South, and 16% in the West. On average, prices were 3.4% higher in August 2009 over August 2008.”
According to Jeffrey Humphreys, writing for Georgia Trend Magazine, “Georgia’s prolonged and severe housing downturn ended in the second quarter of 2009, when single-family housing starts bottomed at 12, 500 units.” Mr. Humphreys predicts that “… the upturn in new home construction and housing sales that began in mid-2009 will gain momentum in 2010.”
Evidence that prices are stabilizing and demand for real estate is increasing here in Coastal Georgia becomes more apparent each day. Inventories, which were never extensive along this section of the Coast, are shrinking, particularly in new products. During the last two years, builders have adjusted housing starts in response to market conditions. Increased interest from prospective purchasers, which began in early spring, is now reflected in pending contracts and closings. For example, increased transactions in the last three months are reminiscent of the hot sellers’ market of three years ago. Multiple offers on desirable, well-priced properties are increasing. Many real estate companies report that phones are ringing with inquiries; website traffic is also increasing.
For the near future, buyers will continue to enjoy the best real estate opportunities in a decade:
- Interest Rates Below 5%: Competition for money, including the Federal government’s extraordinary deficit spending, will drive interest rates up, and soon. But, for a limited time, the Federal Reserve Board is holding rates affordably low. The U. S. Weekly average for the first week in October for a 30-year fixed rate mortgage was 4.94%; that’s rock bottom pricing for long-term money! If you are waiting for prices to drop, stop waiting. A 10% decrease in price is required to offset a 1% increase in interest rates. Increasing prices and increasing interest rates are much more likely.
- A Pricing “Do-Over”: On certain properties, today’s pricing is on par with pricing from early 2000. During 2005-06, many of our purchasers opined, “If we had only bought in 2002, look how much we would have made on this property!” Our view is that 2002 has come again, as will 2005-06. If you are smart enough to enter the market now, you can have a “do-over!”
- Selection: The choices are plentiful in most price ranges. However, since limited new inventory, particularly new construction, is being added to the marketplace, these choices will diminish with each passing week.
- Demand Backlog: People have deferred important real estate decisions for more than three years, particularly the baby-boomers who plan to retire “south.” Improving market conditions will release this pent-up demand, which will absorb more of the available inventory. Prices will rise as demand increases and supply decreases.
- Tax Advantages: Both the Federal government and the State of Georgia will pay qualified individuals to buy a home, up to $9,500, in real money. If you qualify, you should move quickly, as this opportunity ends soon.
Market conditions are changing…. and quickly. As Mr. Brennan states, “…people are as blind to the bottom as they were to the top. You can’t wait for some analyst to make the call. You have to buy now if you want to make some money.” Thank you, Mr. Brennan. We couldn’t have said it any better!
The professionals at Hodnett Cooper know the best opportunities in today’s market. Request our “Best Buy” list and become a part of the real estate recovery. Sometimes, you can have a do-over. Don’t miss this one!