The current Real Estate Market

When I talk to people about buying or selling a home these days, most react with an involuntary shudder followed by some comment about how only a fool would think about getting involved with Real Estate these days. We are, after all, right in the middle of a nationwide recession, and we do, after all, have an extremely high number of foreclosures occuring.


If you know even one Real Estate investor, ask them about the market. They'll very likely tell you that the market is great! There is no better time to buy! You can find deals for fifty cents on the dollar compared to home prices just a few years ago!

The fact is, your investor friend is absolutely correct. We are in the middle of a recession, which lowers prices, and makes homes affordable for individuals that couldn't afford to buy a few years ago when the bubble was still intact. With the inventory of short sales, bank owned and foreclosed homes that we have at the moment, many home sellers are desperate to get out of their mortgages. This makes them very negotiable when it comes to seller assistance for closing costs, seller-bought home warranties, and making repairs to otherwise inconsequential items that a buyer may have accepted as is just a few years ago, such as needed paint, carpet or windows.

Furthermore, we are, after all, in a recession. The way that we improve the economy and get out of the recession is buy participating in the economy. An article I read a few days ago by a financial analyst stated that we have an inventory of about two to three years of foreclosures and bank owned properties, and that the number will grow over the next two years.

Most of this is due to the fact that too many people bought far above their price range due to the relaxed qualification criteria causing banks to write loans for just about anyone that had a job. Now, Mr. Jhonny Homeowner has a home that he payed $350,000 for that has returned to it's appropriate fair value of $175,000. The adjustable rate, interest only mortgage that he got at a great starting rate has changed it's terms and his $1200 payment just went to $2200 and has caused him to default. The bank will take his property and either auction it or advertise it for sale. Knowing that they will never get the $350,000 that is owed to them, and also that they will likely never get the $175,000 that the home is worth, they will write off the loss and offer it for a bit (sometimes quite a bit) less. Now, Mr. Smart J. Homebuyer can buy this $175,000 home for a huge discount, gain instant equity, have most if not all of his closing costs paid, get a home warranty out of the deal and settle into his new home with his 4% Fixed APR no-money-down FHA backed mortgage with an $800 payment, $400 less than he was paying to rent his two bedroom one bathroom apartment.

My final thoughts for this post: We're in a Buyer's Market currently and many, many people are going to find incedible homes at incedible prices with incredible terms. We will, as always, have those that were left behind and will continue to dream of owning a home because they stayed afraid of the current market without really understanding what it was that they were afraid of. The government will continue to come up with bright ideas and create programs intended to fix the economy and improve the market, but it will be a slow and long process. The only way to kickstart the economy and raise us up out of this recession is to participate in the market and clear out the inventory of discounted property flooding the housing market. Get out there, do your part and buy a home. If you already own one, buy another to rent to one of our friends who are afraid to buy and create an income from it. It begins with action, go out and make it happen!