As a real estate broker, as with most professions, my daily conversations result often in general questions about the real estate business and the Madison market.
Here are some of the most common questions I have been asked recently. The answers are a combination of opinion and fact.
Q: Is the market in our area changing?
A: Yes, showing traffic has increased and we are starting to see buyers return to the market. The first quarter of 2010 was incredibly strong.
We have more properties with “accepted offers” than we have had in many, many months.
Listing inventory is DOWN, with a current “sellable” inventory of only about 4.9 months’ worth of available homes. Buyers are sensing we may have reached the bottom of the market and have urgency to buy before prices start to rise.
Most buyers still are looking for a bargain.
Q: Where do you see the real estate market headed?
A: Either up or down. The supposed experts did not predict this market fall, so it is difficult to predict the future of the market.
I wish I had a crystal ball, but I don’t. One thing certain is that all real estate is local, so each market should be evaluated on its own characteristics.
Q: Would you buy real estate today as an investment?
A: Definitely. While I don’t know in the short term if prices will rise or fall, a long-term hold seems favorable at these price levels and at today’s low interest rates.
If you look at today’s real estate prices, many properties can be purchased well below replacement cost and with a positive rental income. It seems like a good long-term value if you can buy below replacement cost and have positive cash flow in the interim.
Q: If you were going to buy a home today, would you buy a foreclosure, a bank-owned property (REO), a short sale or a non-distressed “regular” property?
A: The answer to this is the same answer an attorney usually gives you — it depends. Buying a foreclosure can be risky, especially if you are buying without an inspection.
In addition, many foreclosed properties sell for less once they have been repossessed by the lender. We will often see a significant price drop once the property becomes “bank-owned” (REO). A short-sale can be incredibly time-consuming, so pursue these without any expectation of a deadline or timeframe for closing.
Any property (bank-owned, short sale or a non-distressed property) should be evaluated on a case-by-case basis. Because of the competitive nature of the real estate market, non-distressed (“regular”) properties can be an even better value than a bank-owned or short sale property.
In other words, “regular” sellers also need to sell in this market under many “normal” circumstances (job transfer/loss, divorce, new baby, etc). Savvy “regular” sellers will need to price their homes competitively to sell in today’s market.
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