If you were shipwrecked on a deserted island, got rescued, and just returned to the United States, you could surmise that people no longer buy or sell homes in America. After all, the media portrayal of the housing industry doesn't leave much room for hope. Each day, the news stations, print media and many online sites focus on the "housing bubble" or the "market declining." It's no wonder that people are somewhat hesitant to make a decision.
What is never mentioned is that in the information age that we are living in, (with so many different mediums fighting for the collective attention of the masses), is that the media relies on sensationalism to garner attention, particularly when it comes to issues surrounding finance. The media often times plays into irrational exuberance when markets are rising, and doom and gloom when markets are declining, because there is no "sizzle" in neutrality.
In recent times, the real estate market has had a target painted on its back for the media to take aim at. It's been a pretty easy target to hit lately, what with the sub-prime fallout, the sudden rate changes to jumbo mortgages, rates being adjusted on adjustable rate mortgages (ARMs), short sales and foreclosures providing a veritable cornucopia of potential pitfalls. While these are all legitimate concerns in the current housing market, it is not fair to use such broad strokes when painting the picture of actual market conditions because not every person is adversely affected by each of these factors.
Real estate trends always have been, and always will be, determined by local markets, and therein lies the problem with the way that the media portrays the overall market. All of the factors of the market are inextricably linked for better or for worse, but that doesn't mean that every single market reacts the same way to each factor.
There is definitely an issue with the sub-prime market that has affected the overall mortgage market, but some areas are much more affected than others. Sub-prime mortgages have traditionally been used by borrowers that have little or no down payment and blemishes in their credit history. These buyers tend to buy in lower income housing areas, so those areas are more likely to directly feel the impact of the sub-prime fallout, whereas more expensive areas don't.
The more expensive homes are more likely to be directly linked to the sudden rise in jumbo mortgage rates then they are the sub-prime fallout. It doesn't take much to fall into the jumbo category here on Long Island. Any home that sells for over $521,250, with 20% down, is either going to require a jumbo loan, or a piggyback loan. The sharp rise in rates may have lessened the buying power of those falling into this price range, but in many parts of the country, this price range buys you a mansion. On Long Island it buys you a decent home.
The point is that each market is unique in its own way, and deserves to be treated as such. Many of the markets that are in steep decline are in that position as a result of speculators artificially inflating prices with no intention of ever moving into the home, or more likely, the luxury condo that they bought with the sole intention of flipping it to someone else. Understandably, the meteoric rise of certain markets was met with a precipitous fall when the markets shifted.
However, many markets had very gradual gains and either continued to rise slowly or level off, contrary to the media's reporting of falling markets. Even in the markets that are reported to be falling, such as Long Island, research has shown that it isn't a foregone conclusion that every market on Long Island is declining. A study of various markets throughout Long Island shows that some markets are declining, some are rising and some are staying relatively flat.
If it is possible for market trends to differ between bordering towns, it stands to reason that speaking of the real estate market in terms of the nation is at best a vague representation of the facts, and at worst, a gross misrepresentation of actual local market trends.
Buyers and sellers, please note that you can easily obtain the facts and figures that define your local market trends by contacting a REALTOR® in your market. If don't have a relationship with a trusted real estate professional, I would strongly suggest finding one on ActiveRain.com. This incredible forum affords you the opportunity to get to know about REALTORS® that are servicing your market area in a much more dynamic way than ever before.
You may think that REALTORS® have our own agenda, but many of us joined this profession because we truly want to help people. The media uses sensationalism to push its own agenda, which is to build an audience that has enough critical mass to generate income and profitability. If you're thinking about buying and/or selling a home, please don't be dissuaded by the doom and gloom that you experience regularly in the media. I encourage you to speak to a local real estate professional to find out about your specific market area before making any final decisions about your future housing situation.
If you live on Long Island, and would like to have a year-over-year market trend analysis performed for your particular town or school district, please contact me directly by phone (631) 357-2036 or via e-mail Adam@AdamWaldman.com. If you are reading this article from someplace outside of Long Island, but would like some help in finding a REALTOR® in your market, please feel free to contact me as well. I would be happy to help you find someone that you can trust to give you good information.
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