More of the Same for 12 to 18 More Months
The current real estate market is likely to continue to remain the same for the next six to twelve months. After the upcoming election it may take six to twelve months for the new President to implement policies that will have an impact and stopping the recession if we haven't plummeted into a depression before then. After the election, consumer confidence may return, but, not until oil prices ease (which are a large component of everything we purchase, from food to fuel). It is difficult to imagine that conditions are going to improve in the immediate future. So what is likely to happen in the real estate market over the next few months?
Home Prices To Decline
Home prices may fall another ten percent or more before buyers perceive there is value in the real estate market and start purchasing homes again. But lower home prices will not trigger a tipping point alone. Lower prices coupled with lower mortgage rates could stimulate home sales.
Mortgage Rates To Decline
Mortgage rates are and always have been market-driven. The real estate market - which depends heavily upon the availability of mortgage money - is slow because of fewer loan products, tighter underwriting, declining appraisals, high asking prices, and consumers' lack of confidence in the market. Interest rates below 6% and relaxed lender requirements might stimulate sales.
Activity Level To Decline
While home prices in our area have remained stable, volume is off from this time last year with one-third fewer homes sold in June compared to the same period in 2007. Until sellers stop holding onto high asking prices, until interest rates decline below 6%, until lenders ease borrower qualifications, home sales will remain sluggish.
In Conclusion
If you are selling you need to lower your asking price until showings increase and you get an offer. Then you'll need to run with it, no matter what the terms might be. If you are buying, you have many choices so look for a deal then negotiate hard.
If you are thinking about buying or selling a home or know someone who is, for a confidential, private, professional consultation without any obligation to discuss today's real estate market, please contact Stephen Howell at 410-923-3217.
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