Positive Trends For 2008
Tuesday, October 30th, 2007If you are the type of person who only reads the newspapers and watches the 6 o’clock news then you probably have the impression that the real estate market is at all time low and heading lower. Are there challenges of dropping values in the market? Are foreclosures a problem? Is it much harder for credit challenged people to get a home loan? If you answered yes to the last three questions then you have been closely following and understanding the trends in the market.
What I want to point out is that along with the aforementioned problems there are some very positive trends that bode well for 2008 and the real estate market.
- Down payments are back in vogue. Although there are a limited number of buyers who will qualify for 100% loans the trend is towards down payments, in many cases approaching 20%. Owners who have their own cash invested in a home tend to take better care of the home and are far less likely to abandon it to foreclosure. They increases the quality and desireability of the neighborhoods in which they live and tend to stay longer in their homes.
- The glutted listing market is forcing agents and sellers to properly price homes up front. This realistic approach accounts for current market trends and highlights the individual qualities of the homes making them less of a comodity and more of an individual home competing as the best alternative on the market. Over time this will force the wrongpriced homes off the market or cause them to adjust their prices to conform with the reality of the market.
- In a tight market part time and unsuccessful agents are looking for other means of making money. This leaves the professionals who know how to sell homes and how to take care of their clients. These agents also tend to have the long view towards their business meaning that they understand the importance of client satisfaction and client follow-up.
- Many investors are switching from fix and flip to fix and hold. This will mean more rentals for the potential buyers who do not qualify at the present time but who are working on improving their credit rating. This will also mean that those investors will spend the money to make their rental properties attractive to quality renters. Investors tend to look for the most attractively priced alternatives - HUD owned and foreclosures - which means that a previously poorly maintained and vacent property in a neighborhood will be rehabed and inhabited.
Are there challenges ahead for 2008? Certainly. Have we seen the last of the foreclosures? Unfortunately not. Will people still need to buy and sell homes? Most certainally! The road ahead will reveal many opportunities and challenges, however, it is not leading to the end of the real estate world as some would like you to believe.