Buying or Selling a Home in a Volatile Market
Buying or selling a home in today’s market can be a scary and confusing process, especially when the so-called experts are not even sure what’s going on. In August, for instance, builders were decidedly pessimistic. They informed the National Association of Home Builders they didn’t expect significant growth in the new home construction sector for at least six months. Then they went and started more new housing projects than they had in any month since last November. Housing starts spiked 10.5 percent over the previous month and building permits rose nearly 2 percent, as well.
At the same time, foreclosure are rising, as is unsold inventory, but, according to the latest Case-Shiller index, prices are rising also. All this means that it’s either a good time to buy or a good time to sell. Deciding which is a delicate move that could impact the biggest single transaction of most people’s lives.
The first thing to do is to not rush into anything. The most common observation among economists about the housing sector is that it won’t recover very quickly. Analysts predict it will be several years before prices return to peak levels of 2005 – 2007. And interest rates are not expected to zoom up any time soon, either. Whether buying or selling, there is plenty of time to make an informed decision.
Any housing decision should be preceded by thorough research into the local housing market. Like with politics, real estate conditions vary widely from one area to the next. Some areas like Las Vegas, Nevada and many Florida communities are still experiencing high levels of foreclosure and a recovery still seems years away. Other places like Colorado Springs, Minneapolis, and Des Moines, where the peak wasn’t quite as drastic, are doing just fine. Local real estate agents can provide helpful information, as can websites such as Trulia.com and homegain.com. Information obtained from these sources can be very helpful when negotiating a purchase or sale of your home.
When buying a home a good rule of thumb is to expect prices to drop further. A recent survey on HomeGain suggests there is almost always a disconnect between what sellers think their home is worth and what buyers are willing to pay. The survey shows that just under 80 percent of homeowners think their home is worth more than agent’s recommended listing price, and almost 70 percent of agents think homes are generally overpriced. When a homeowner is truly intent on selling a property, they will reduce their asking price to as level that will attract offers, which means buyers will eventually get a home for the price they’re willing to pay.
For Americans considering the purchase of either a second home or a retirement property, now is the right time. Prices have hit bottom in virtually every part of the country, and, with interest rates at or near record-lows, affordability likely will never be as high again. But beware of under-populated communities. Even though you may get a great deal on the purchase price, a lack of neighbors could lead to exorbitant homeowners dues and clubhouse fees, as homeowners associations try to survive with just a few residents.