As we head towards another year's end, I will not have the luxury of slowing down, taking more time off or going to as many holiday parties as I would like. You see, I have my third child (third daughter) coming in late January and I have to be ready for the onslaught of buyers that will have a renewed sense of optimism for the coming new year. Come to think of it, optimism may not be the most appropriate word here. Reality would be more fitting. Why reality you ask?
Digressing for a moment....... If you read any press clippings, listen to the radio or watch TV, you would be hard pressed to miss all the stories about how bad the real estate market is. Record foreclosures, sinking prices, the credit crunch and anything else that will help make the case that the real estate market is in the tank.
Back to reality. Why reality you ask? The reality is that all real estate is local and we have not seen record price decreases, less than 1% of all mortgage are in default (ever hear that in the press?), the credit crunch is a good thing, why? Loans and underwriting guidelines will get back to reality and start to self correct.
NOW may be the best time to buy for many reasons but the hype is so overblown that it is not based on reality but rather perception.
Reasons to buy NOW.....
- Interest rates are below 6%.
- The dollar is weak. What? As backwards as that may sound, the fact is that a weak dollar helps keep interest rates low. Guess what, the dollar will gain strength and interest rates will rise. A weak dollar is a hedge to combat inflation.
- Prices may be artificially low. It's a buyers market right? When current inventory levels are high, it takes a certain amount of time (usually in months) for the inventory to decrease. This is called an absorption rate. If we have an absorption rate of 7-10 months, most sellers will keep reducing the price of their home until it sells.
- Banks have loosened up a bit. I believe banks that foreclosed on their asset have started to loosen the purse strings and very few have the same price demands compared to last year. Did you see that Citigroup and several others wrote off several billions dollars in bad debt?
- Lots of choices for buyers. In any given price range, you will be more likely to find the perfect house.
It goes without saying that I could come up with at least a dozen more reasons for buyers to buy. The truth is, now may be the best time to buy in years. When interest rates go up, you may not be able to afford the same house that you could have bought today. Waiting for the market to crash? The east and west coast perils do not reflect the local market in Northern Colorado. When California was appreciating 30% per year, did we experience the same? Nope!
Being an optimist gives me hope that buyers will see the light (reality) and avoid grouping all real estate with our real estate. So buyers, I will be spending less time with family and friends, going to fewer holiday parties as I will be diligently checking out the inventory, finding the best properties available in any given price range and looking forward to your call.
Buy now and remember, all real estate is local.
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