It is hard not to believe that we are in a housing crisis when we hear that message from so many media sources and it is repeated by our friends and family. But what really is going on locally - because housing is a local issue.
How big of an issue is foreclosure locally?
Here is a great video clip from CNBC about the housing crisis and in specific, foreclosure rates nationally. Did you note that Washington is not one of the states where foreclosures are dramatically impacting our real estate market?
In the Seattle/Bellevue/Everett area, as of Q1 2008, there was only 1 foreclosure out of 517 homes. That puts us 81st on the list of the top 100 metropolitan areas. Not exactly a crisis (except to those who are personally impacted).
So why does it still FEEL like we are in a housing crisis?
If you are a seller - you are likely frustrated by the fact that your home is sitting on the market. Why is this happening if we aren't in a housing crisis locally?
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Expectations. Unfortunately sellers got spoiled by the previous years of double digit appreciation in prices and the aggressive sellers market - homes sold very quickly, often in hours, with multiple offers. In a balanced market or buyers market, it is normal for a home to sit on the market for awhile.
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Pricing Reality. If you want your home to sell sooner then later - then you have to price very carefully now. This is not the market to "test your price desires". You have to price based upon the current market data. We have more inventory right now for several reasons: (a) sellers are reluctant to price their homes at market prices, (b) buyers are slow to make buying decisions because they are waiting to buy at the bottom of the market, (c) there are fewer buyers because it is harder to qualify for loans and there are fewer loan options out there.
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Aggressive Marketing Required.Not that long ago, you could put your home on the market in any condition and it would sell. Not any more. Now you have to do it right. It is critical that you are working with a real estate agent that knows what they are doing and can guide you in the selling process. (See Tips for Selling Your Home in a Down Market)
If you are a buyer - you might be worried about buying a home that will decrease in price after you buy it, or worried about selling your own home first, or worried about getting into a bad loan situation like the homeowners you are hearing about in the media. Are you contributing to the perceived housing crisis?
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Timing the market. Whether you are talking about stock equities or real estate - timing the market is a fools game. Generally by the time it is clear that the market has hit bottom, the prices are already on the way back up. Often over looked is the fact that even though the price of a home might decrease - it might not matter if interest rates increase. In fact, a 10% decrease in price is offset by only a 1% increase in interest rates.
For example: $300,000 loan at 6%, results in a loan payment of $1,799. $270,000 loan (-10%) loan at 7%, results in a loan payment of $1,796. -
Favorable mortgage rates & programs. There are more restrictions on loans and it is harder to get loans - which means the chances of you getting into a bad loan situation is significantly less. However - home ownership is being encouraged for those who can and should be buying homes. We are still at rates that are near 45-year lows. In addition, the Fed has increased loan program limits for FHA mortgages and loans backed by Fannie Mae & Freddie Mac to $567,500 in King County. This enables buyers to be able to buy a more expensive home, before the higher interest rates associated with jumbo loans kick in. There is the new 2008 Homebuyer Tax Credit for first time buyers and other programs - talk to your favorite lender for more information.
So stop listening to the media - if you want to buy or sell a home you can and should.
by Michelle Blue
Your Guide to Woodinville Community, Neighborhoods, & Real Estate!
www.MichelleBlue.com
PS: You might also be interested in my post, Top 10 Reasons to Move Up in a Down Market
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