Tuesday, February 10, 2009

Prices Seem Great And Then They Drop. What’s Happening With Our Local Real Estate Market?

Interesting times these are! Yes, we are seeing fantastic prices on properties … and then they drop. The pricing frenzy reminds us of the time we were returning from a hunting trip in O’Neil Basin in Elko County. Access to the Jarbidge Wilderness from the east is via a very long dirt road … a good opportunity for an eight year old to get some driving experience. We told our oldest son, “keep up with Uncle Jerry” and he did that as we followed his uncle and grandpa along the road. After about 15 miles we noticed we were doing 40 miles an hour … with an eight year old at the wheel and a huge turn approaching.

We implored him to “SLOW DOWN”, but reaching the pedals was difficult for an eight year old. Finally we skidded to a stop behind his uncle as they, too, had decided to stop. It was then that we found out that grandpa had told uncle to, “stay ahead of Adam”. That situation is like today’s real estate market. Sellers are being told to “stay ahead”, or “keep up”, as we speed down this perilous economic course together… the windy dirt road. When we agreed to travel around 25 miles an hour we had a reasonable trip to the highway. We believe a reasonable “25 miles an hour” approach will help Sellers and Buyers find their way in this Market. Until that happens keep your cool in the chaos.

Home prices are falling as Buyers are making offers and Sellers are accepting them. It takes a willing Buyer and willing Seller to make Market Value, and not all Sellers are “willing” these days. Though they accept offers, we feel that prices are actually lower than value in many cases due to many Sellers’ varying levels of what can only be called duress. A property may be worth more, but the Sellers can’t realize a higher price right now. Given the dearth of Buyers the lack of demand is like having diamonds on a desert island … they have value, but ….

Many homes are bank-owned and we know that banks sell by the numbers, not emotion. Good buys to be made there. A few are Short Sales, usually priced artificially low to attract a Buyer. Traditional Sellers are competing if they can … if they have the equity and motivation to do so. Pricing can no longer be a “let’s try it … we can always come down” approach. Properties must be aggressively priced to get sold … today. Watch for the turn, however, as it is looming. Not right away, but the indicators are out there that it is coming.

Our Advice: It’s a great time to be a Buyer, but it’s hard to say how long this will last given the many changes that seem to be on the horizon. There is an effort in Congress to double the first time homebuyer incentive and forgive the payback. There have also been governmental efforts to lower interest rates to 4 or 4.5%. As these and other incentives or stimuli are implemented to turn real estate around look for real estate pricing to get some traction. When it does the free fall will stop and Buyers will have competition for the good buys. Act now while its great and don’t try to time the market … we all know that is like catching a falling knife.

Whether first time home buyer, moving up, or investor … look hard at your options right now … you’ll like what you see. When it comes to choosing professionals to assist you with your real estate needs…
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781- 5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

2 comments:

Richard Stabile Bergen County Real Estate said...

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 12 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 are too short to retire the mortgage, that is another issue for their solvency. The government is supposed to work that out in the stimulus package.

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