The Reality Of the Negative News!

It makes me very angry every time I turn on the news or read an article on line that is saying how “horrible real estate is” and “the housing bubble this and that”.  We turn on the TV or read it on-line and assume that what they are saying is true about the whole nation and applies to every market. Well, that is absolutely absurd. There are many real estate markets that are fine and experiencing normal appreciation. There are other areas that are seeing an adjustment in appreciation but probably needed to.

The areas that are truly experiencing the “bubble” are the areas that have been out of control the last few years. I am sure that if you asked any of these narrow minded experts if they would buy real estate in the current market, the majority of them would also say yes, they would buy a home right now.

Well, if is is a good time to buy a home, how is the real estate market so bad?

Typical news hype, all this negative publicity are the words of a few narrow minded economist who are putting every real estate market in the nation in a box and making general statements that do not apply to the entire nation. Sure, our nation has some areas that have experienced foreclosures and a oversupply of housing. This is mostly due to the housing boom we saw during 2005 and 2006 in those same areas. At some point, the demand had to slow down. Ultimately, some investors did not get their timing right, therefore have foreclosures and an oversupply of housing. Most of this took place in Eastern and Western coastlines.

We have other markets that have experienced some decline in housing value and maybe a slower appreciation, but this due to the local economy. Not because of a “National Housing Bubble”.  That is like saying that every household in the nation has the same economic status or budget. Bottom line is that any real estate market is a local issue and individual in nature.

Toward the end of 2006 we saw the mortgage industry realize that they had been making loans to individuals with marginal credit and very little investment of their own money. Unfortunately, if those home buyers were not in a habit of saving and budgeting before they owned a home, they more than likely were not able to afterward either. This secondary market lending was not used in excess everywhere in the nation. But for the areas where it was used in abundance, this created additional housing when foreclosures started. Therefore, a oversupply and not the demand that had been there before because home buyers qualifications are not the same.

What we are experiencing in most of the country is a normal Buyer’s market after several years of having a Seller’s market. I have said this before and I will say it again…..property can not continue to appreciate at unrealistic amounts….at some point it will adjust itself. This is not the first time we have seen this and it will not be the last. We saw this in the mid ’80’s and somewhat again in the early ’90’s. So we have been very fortunate for a long time. If history repeats itself, we will go through this period for two to three years of a softer market and then several more years of a seller’s market with housing appreciation. A seller’s market is usually longer than any buyer’s market. Which is consistent with what we all hear about real estate being one of the better investments we make in our lifetime.

What some see as a crisis others see as a opportunity. Now is a good time to buy a home in most areas and we are seeing some real opportunities for the investor. Interest rates have come down and it is an election year so we will more than likely see our markets take an upturn in 2008.  I will repeat that all markets are individual in nature and what is important to the reader is what is happening in their local market.  Talk to your local real estate professional and lenders and do not assume anything!