Monday, October 18, 2010

Orange County Housing Report: A Great Time to Be a Buyer

Values have dropped, rates are low, and it’s a buyer’s market. If you are a buyer, what are you waiting for?

Buyer’s Market: Buyer’s should not wait for a seller’s market to purchase.
Markets go up and markets go down. Isn’t it odd that buyers rush to purchase when the market is climbing in fear that they will be left behind. They enter a market where there is tremendous competition and, often, they feel rushed to settle on a home that may not fulfill their wish list. Yet, as markets climb, affordability drops until it finally reaches a point where demand drops, cooling price appreciation. The current market is completely different. It’s a buyer’s market where values have already dropped over 30%. Affordability has been restored and interest rates are at all time lows. Current interest rates improve home affordability dramatically. The historically record low rates translate to the lowest possible monthly payments. Unfortunately, buyers just don’t shop based upon the monthly payment. Too much emphasis is paid on the purchase price and not enough on payments. People shop for cars based upon the monthly payment. Why not homes? As new homeowners mail off their monthly mortgage payment, wouldn’t they rather pay a few hundred dollars less? How about $1,000 less? Cashing in on today’s rock bottom interest rates saves anywhere from hundreds of dollars to over a thousand dollars per month, depending upon how high interest rates will climb. As the market improves interest rates WILL GO UP. This is the absolute best time to purchase, during a buyer’s market. The buyer’s market will not be around forever.

Market Changes: The real estate market will move along its normal cyclical pattern, but don’t expect abnormal changes.
I am often asked where I think the market is going from here. Regardless of what you hear or read in the news, the market is not going to drop off a cliff or skyrocket anytime soon. What you see is what you get, a lot more of the same. For the coming years, the real estate market is not going to change much at all. As a buyer, holding out for another 10% drop is not wise. Values have already dropped over 30% and today’s affordability has propped up demand, keeping values stable. Likewise, for sellers that need to sell and are waiting for real price appreciation, they may have to wait a few years. Boring is the new normal. The market will slow during the Holiday market, from Halloween through the first few weeks of the New Year. It will pick up in the Spring, cyclically the best demand of the year. Then it will cool a bit during the summer. There are no more surprises. It will take a few years to exhaust the infamous “shadow inventory” of homeowners in default. The market has already been slowly working its way through the shadows already. As a buyer or seller, expect more of the same. It really is what you see is what you get.

Copyright 2010 - Steven Thomas, Altera Real Estate - All Rights Reserved. This report may not be reproduced in whole or part without express written permission by author.

This article was provided to you by the Surf City Kahunas of Real Estate:

The Louison Team, Raymond and Stephanie Louison
714-925-5361 or 714-307-2934
Altera Real Estate - Huntington Beach Office
All information deemed reliable, however not guaranteed!

No comments: