The Real Estate Market
December 29, 2008
Some days working as a Realtor is pretty discouraging. Buyers are scared to buy a house now, afraid it won’t be worth what they paid for it on the day they take possession. I’m not sure I can blame them.
Cash investor buyers make offer after offer at 50% of list price or less, only to be turned down or beat out by other bidders.
Too many sellers seem to still be desperately clinging to the idea that their house is the one in a million that has increased in value over the past 24 months. And they want me to spend my hard earned dollars on advertising to find “the one buyer who’ll really appreciate it.” Of course what that means is “the one idiot silly enough to overpay for it.”
It seems the topsy turvey market is bringing out the worst in people. Some days the only sane way of dealing with this craziness is to have a stiff drink at the end of the day. Cheers!
image courtesy of user cx ed over at stock exchange
December 29, 2008 at 7:17 pm
It’s because of the tendency for us as a country as a society to have a very short sighted view. Our energy policy goes up or down based on today’s price of gas at the pump, our view of real estate does the same. It’s no wonder the U.S car manufacturers are dying: solar is in trouble and so is alternative energy, because gas -today- is so inexpensive.
If a house is affordable and you’ll live there 10 years why would a further drop in prices mean much. Should we put our life on hold for 5%? Just thing of a house you live in as a product you use up just like a car: because that is exactly what it is a depreciating asset. It will only go up if you put more money into it as it deteriorates.
The same goes for investing in real estate. Don’t buy it for appreciation, buy it for cash flow and lots of properties are cash flowing.
January 22, 2009 at 6:57 am
I guess you must say all things must pass. This will pass too. The market needs money. If the fed keeps putting money into new mortgage paper with Fannies and Freddie, the money will eventually hit the market. So far it is only hitting in the conforming mortgages. I wrote about 10 weeks ago for the fed to borrow on long term treasury’s and put the money directly into new mortgages at low rates to get the market going. I also said they should provide investor financing to get the foreclosed homes bought and rented. Investor will bring a lot of capital to the market. All buyers must qualify under normal standards.
My investigation also finds the heavily hit markets are reacting to the lower prices and lower rates and volume is picking up nicely.
The banks can not get the money directly, they won’t lend or at least not at the rate and quantity we need. When a purchaser gets a mortgage, buys a property, the old mortgage gets paid off to the bank. The bank receives the money and the mortgage is retired. If the bank’s reserves we short to retire the mortgage that is another issue for their solvency.