For many months, we've all heard our clients, prospects and ad-callers say things like "I'm going to wait until this market bottoms-out, because I don't want to buy at too high a price...", which is perfectly understandable. Given the choice, it's exactly what most of us would do. However, one should keep in mind that the arrival of that ideal timing is not likely to be announced privately and accompanied with a guarantee of a convenient "window of opportunity" in which to act. In fact, by the time it's obvious to all, the biggest advantages are already shrinking.
If one pays close attention to the everyday news from your usual sources, it's possible to add up some simple realities and see the very pertinent clues that are out there now. In fact, right now is what I'm telling my clients and would-be buyers, because this is the time that we are going to look back on and say "That was the time to be buying!"
Why do I say this, you ask? Well, first of all, you must remember that what the news media report about the residential real estate market is usually old news by the time they say it. Reports and statistics about home sales are generally based on closed sales, not the thoughts, motivations and actions of buyers prevailing in the market right now. Those closed sales are the result of decisions and deal-making negotiations from 30-60 days prior to the closings.
If one wants to know what is happening in the marketplace now, look to trends like Pending Sales, which are rising significantly. Even the Orange County Register can help here, reporting on 4/8/08 that there were 2285 deals created in the past 30 days, which was 159% better than a year ago. It went on to report that the "market time" benchmark, measuring how many months it theoretically takes to sell all the homes in the Orange County MLS listings inventory (at the current pace of sales) is dropping. Now at 6.77 months, it was 7.5 months just 2 weeks ago. At the lower price ranges, it's significantly lower and dropping, even as overall inventory levels are stabilizing.
The fact is, determining an ideal time to buy is a matter of counting one's blessings, realizing that some offsets are inevitable, as in most things in life. Consider the current mortgage interest rates, which are enviably low and attractive. Recent adjustments to both loan limits and secondary mortgage money availability are making more loans available to homebuyers. Think too, of the depth of inventory, providing many home choices to pick from. Typically, these are accompanied by motivated sellers, including at least 1/3 of which are financially distressed. Prices themselves are generally in the realm of what we paid for homes in 2004, based on median selling prices. Negotiability concerning prices, terms, repairs and so on still favors the buyer.
In some cases, a buyer who acts quickly on a home purchase can still succeed without a lot of competing buyers to either bid the price up or worse, take the property away with their winning bid. But here's the kicker, and a bell-ringer for those who are paying attention. Many of the best available deals are selling quickly and with multiple offers (remember when that was typical?). New listings (often bank-owned) that are well-priced are not staying on the market long. Savvy buyers understand what is happening and are taking advantage of an ideal set of market-based opportunities.
If the naysayers are correct and the market values do drop a few more percent, is it safe to assume you'll be able to squeeze every last dollar of price advantage out of the deal? What if there are more competing buyers for it, higher mortgage interest rates, less negotiability, or fewer choices in the market? If you're considering buying a home in Orange County any time in the near future, "near" will be the key word for the happiest of success stories.
by Dick Hamer, e-Pro Regency Real Estate Brokers 949/887-3048
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