Is our local market different from the national market?

I saw an interesting article today in the NY Post about the "foreclosure five" -- Nevada, California, Arizona, Michigan, and Florida -- and about how they drive the attention to the "national" real estate market.  I've made the same point a number of times in this space (to the extent that I've had agents complain that I talk too much about those states), to caution homeowners (and buyers) in our area to focus more on local information about real estate than national information. 

No question that our local market is going through a correction.  For almost four years, we've had significantly declining transactions, and I expect that the number of homes sold in the first quarter of 2009 will be lower than in any quarter this decade. And we've now seen prices take a dramatic drop in the last half of 2008.  But I'll stress, for like the millionth time, that a correct is different from a bubble, and our market is different from that "foreclosure five."

• We never saw homeowners go through widespread refinancings with gimmicky 105% mortgages or subprime atrocities.  They just didn't become popular the way they did in Arizona, Nevada, Miami, and California.
• We had appreciation from 2000-2005, but nothing like the 25-35% yearly appreciation in some of the "foreclosure five" states.
• We've had some economic troubles, but not nearly the type of breakdown that you see in areas like Michigan or Ohio, and which is coming to Nevada with the decline in convention business.
• We haven't had natural disasters that seem to be commonplace in southern California or Florida

Yes, we will go through another year, maybe two, of declining prices.  And this will be a verrry slow first quarter. And we will see foreclosures rise.  But try to focus on what's going on here, not in other areas of the country.

So is it a good time to buy?  I think so, just like I think it's a good time to buy into the stock market, simply because I think that the general fearfulness in our society right now is causing most assets to become undervalued. If you want to wait until you discern the bottom of the market, then go ahead, but remember that there's no guarantee that 5% rates will be available in a year.  For more information contact Kevin Cavanaugh here.