Real Estate News

Question: I am ready to buy a house but I want to make sure that I get the best price. How will I know when we are at the bottom of the market?

Answer: It is quite possible that we will look back at this market next year and recognize that 2008 was the best time to buy. Any broker that has experienced several market cycles will tell you that you can’t time their exact peaks and valleys. The bottom of the market will only be apparent after it has been passed and prices have begun to increase.

Inventory levels along with other leading indicators now point toward the beginning of market stabilization. Prices will most likely continue to decline a bit more because there is always a lag between the bottom of the sales curve and the bottom of the price curve.

But consider this. Interest rates will most likely begin to rise later this year or early in 2009 due to serious inflationary pressures. A one percent increase in mortgage interest rates will more than offset any savings from future price declines, making affordability greatest right now.

The April 18, 2008 Kiplinger Letter supports this by stating, “More and more buyers won’t wait much longer to try and catch the absolute bottom price. With mortgage rates at low levels….qualified buyers are pulling the trigger.”

Question: My home has been listed for several months without an offer materializing. I have been told that Sunday open houses are of more benefit to the Realtor than to me as the seller. Is that true?

Answer: Absolutely not! While it is true that holding a Sunday open house is an excellent way for agents to come into contact with potential buyers, it is also very beneficial in exposing your home to the buying public.

Because of the internet, the behavior of many home buyers has been altered. A great deal of listing information is now available to the general public online, so there is a propensity among some buyers to wait until the very end of the buying cycle to engage a Realtor. But even though buyers can get considerable information about homes for sale from the net, the one thing they cannot get is access to homes: a licensed agent is mandatory.

Internet shoppers are more inclined to visit Sunday open houses right up until the time that they are ready to make an offer on a property. While they may be “tire kickers” early in their search, a large number of them are poised to make a buying decision. Putting your home in front of ready, willing and able buyers is always a good idea!

Much has been written in the news media lately regarding the real estate market. There was a particularly interesting article in the Detroit Free Press April 13, 2008 entitled, “18.9 Month Supply of Homes For Sale.” This headline was accompanied by a number of dramatic graphs and charts which, at first glance, appeared to paint a doom and gloom picture of the market.

What was interesting about the article was that it actually included some very upbeat comments from Don Grimes, a noted U of M economist and several other local real estate experts. Their commentary, which could only be found buried much deeper in the article, spoke about the bottom of the market being at hand and the potential for the beginning of a fairly rapid recovery within the next twelve months.

Headlines of this nature, along with published short term MLS statistics, must be taken with a grain of salt. We all know that negative headlines sell newspapers. The market will have long turned the corner before the media catches on.

Our role, as trusted advisors, is to temper the bad news with a more balanced approach based on longer term trends. Focusing on inventory swings in the tiny community of Huntington Woods, as the article did for example, is very dangerous and not reflective of the overall market.

To paraphrase Don Grimes, factors that drive home demand such as marriages, births, divorces, deaths, etc. continue to occur and create pent up demand. Once people sense that prices have hit bottom, it won’t take long for the market to turn around. He believes that we are near that point.

Those who wait for the absolute bottom before buying will most likely miss it altogether. Any good stock broker will tell you that. And so will any good Realtor.