Iinteresting article for home buyers
Glut of homes has created the ultimate buyer's market
Falling prices, low mortgage rates mean bargains galore
Metro Detroit's down-and-out housing market may be a nightmare for sellers, but it's a paradise for potential home buyers.
Probably no other group of consumers is in hotter demand this year, and no other group has more good reasons to open the checkbook.
Whether you are a first-time buyer in the market for a starter home, a growing family looking to trade up or a baby boomer ready to splurge on a cottage up north, there may be no better time than now to buy.
Just ask 22-year-old Keith Nida of Clinton Township, who bought a house in Roseville for $50,000 below its asking price. Before he found the house, Nida put an offer on another house, but the bank foreclosed on it before his offer was approved.
"It was either bad luck or a blessing in disguise," Nida said.
So if buying a house is on your list of things to think about in 2007, here's what awaits you:
# There's a huge supply of homes, condos and rental housing to choose from. In 2006, there were 45,998 residential properties that went on the market in Wayne, Oakland, Macomb and Livingston counties. That compares to just more than 14,000 in 2001.
# Prices of houses are dropping, and may be near their bottom. Experts predict prices will fall a bit more in 2007 before they start rebounding. With so much supply and so little demand, the median price of a Metro Detroit home declined 7.1 percent from 2005 to 2006, to $163,082.
# Mortgage rates still are at historically low levels. No, you probably can't get a 30-year fixed-rate mortgage for 5.5 percent right now, but you can get it for around 6.3 percent, still a good rate. And while you need to be a bit careful when negotiating an adjustable-rate mortgage at an even lower rate for the first few years, an ARM can be a good choice for certain buyers.
# There are plenty of deals to be had. Behind most of the homes for sale is an owner who really needs to or wants to sell. (The rest are waiting out the downturn.) Because sellers are fighting for so few buyers, almost any offer will be considered.
# Sellers are throwing in a slew of incentives, some fun (Detroit Tigers season tickets, a two-year lease on a new vehicle), some useful (a free home inspection) and some practical (paid closing costs). While most buyers would never buy a house simply to see Tigers games, such incentives sure don't hurt when you're making such a huge purchase.
"The market is great if a person is looking to buy," said Ron Simpson, president of the Detroit Association of Realtors. "Property values declined sharply in the past year. Jump in now and find your dream home."
To get people in the home-buying mood, the National Association of Realtors launched a $40 million national TV and radio campaign last month, touting the advantages of buying a home in a slow housing climate.
Discounts attract buyers
Deeply discounted homes convinced Nida to start looking for a house in December. A first-time buyer, he looked at more than 100 homes before deciding on a two-bedroom, 1,200-square-foot fixer-upper in Roseville. The owners reduced the price from $135,000 to $89,000 to make the sale.
Even though Nida didn't get a great rate on the mortgage -- 8.5 percent -- because he's self-employed, he still thinks he got a bargain, and he plans to refinance to a lower rate in six months. A home remodeler, he wants to fix up the house and sell it when the market turns around.
"I learned that you've got to be very patient," Nida said. "If you're patient, you get what you want."
Khaalib Raheem also sees opportunity in this slow housing market. A 32-year-old auto technician from Detroit, Raheem is looking at homes in higher-end communities such as the Grosse Pointes for his family.
He also wants to buy single-family and multi-unit homes in Detroit to rent out. His Realtor was able to supply Raheem with at least 300 rental properties that cost less than $25,000.
Raheem is eager to make an offer when he finds the right properties at the right price. And he's eager to move his fiancee and their kids from their five-bedroom house in Detroit to another neighborhood while the deals are hot.
"At these prices, I'm definitely out of here," Raheem said.
Not everyone can buy now
Obviously, it isn't a good time to buy a house for a lot of Metro Detroiters.
Those who have been laid off or worry they could be soon, who have taken auto buyouts and aren't sure what their next career move will be, who aren't willing to sell their house for a lot less than they think it's worth and those who are living paycheck to paycheck aren't typically good candidates, no matter how good the deal.
Even if you are a candidate, University of Michigan senior research specialist Don Grimes urges some caution and realistic expectations.
Buyers can get a bargain right now, Grimes said, but he questions whether southeast Michigan's housing market will ever rebound to what it was a decade ago. He cautions buyers against expecting big gains in home values over the next several years.
"I have no doubt there are deals to be had," Grimes said. "But don't go into it expecting appreciation except at the rate of inflation."
But buying a home is a good option for many, Grimes said. "If it's a good situation for you, then do it. If it's not, then wait."
Realtor Ron Simpson, president of the Detroit Association of Realtors, agrees that buyers who expect quick appreciation will be disappointed.
Buyers won't get a return on their investment until the economy improves, and that is at least a year away, economists forecast.
Until things get better, Simpson said, buyers should be prepared to keep any property they buy. "Is it a good time to buy a home? Absolutely -- if you can afford to hold on to it," he said.
Don't hurry to make an offer
With buyers in control, they are in no hurry to make an offer and they shouldn't be, Realtors said. House hunters should take their time, look at many homes, research mortgage programs and know their options before making a decision.
John Kurczak, a Realtor with Keller Williams Central in Sterling Heights, said his clients are on the lookout for the best deal. Many buyers won't even look at a property unless they can practically steal it, he said.
That is why Kurczak warns home sellers against holding onto a house for too long. He advises considering any offer and working with the buyer.
"There's an old saying in the real estate businesses that goes: 'Your first offer is your best offer,'â?," Kurczak said. "Don't get upset if the offer is too low. Sellers need to understand the buyers' anxieties and work with the buyer; you have to give and take."
Even if the seller has to take a loss, he or she can make up for it by buying another home in the region for less than it is worth, Kurczak pointed out.
Experts predict Metro Detroit's housing market will favor buyers for at least another year.
Prices will drop another 10 percent to 30 percent in 2007 and begin to stabilize in 2008, said Kurczak, who has seen this up-down cycle many times in his 16-year career. "This is the storm we're going through right now," he said. "We're at our bottom; the only way to go is up."
You can reach Jennifer Youssef at (313) 222-2319 or jyoussef@detnews.com.
If your getting ready to purchase your next home , there no better time than now according to this article. we are a 100% full service Real-estate Team that can provide all the information you need to purchase your home. Give us a call at (586) 412-2247 or e-mail at ptocco8975@comcast.net Were ready when you're ready !
Pete & Rebecca Tocco from Realty Executives Group www.petertocco.com
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