Not too long ago, we were in the middle of long, upward-trending market. Real estate values were appreciating steadily and sometimes substantially. Then, suddenly, the situation changed. BAM! The bottom fell out, or the bubble burst, or whatever. Use the analogy of your choice, but virtually overnight we went from a strong sellers’ market past a strong buyers’ market and right into recession where folks couldn’t buy homes no matter how badly they needed or wanted to do so.
That’s where we’ve been for the past couple of years, although we’ve been slowly but surely working our way out. The real estate business is different, but it’s still IN business. New rules are being figured out and experimented with. The credit rules are being eased again and new loan products are being created, allowing more and more folks to buy homes with loans that make sense. Banks and mortgage servicers are figuring out the fine line between dripping foreclosed inventory into the market fast enough to clear the backlog, and flooding the market so much that the nascent recovery is inundated.
Slowly but surely, we are crawling our way out of the depths of the market.
In just the past few days, there have been a few interesting pieces of news slip across my computer screen. First, interest rates are continuing to rise. It is possible that we have seen the bottom, and are moving past it. Second, the number of transactions has increased over last year. Finally, although many (most?) predictors are showing continuing price decreases into 2012, at least one model is showing that some parts of the country might actually see some price increases by the end of 2011.
I’ve already written about the importance of rising interest rates as a factor in determining the true cost of real estate. With rising rates, buyers have a lot of incentive to buy NOW. The more buyers buy, the smaller the inventory, which leads to upward pressure on prices. Add in the potential of rising prices, and the urge to buy now gets stronger still.
Factor all these pieces of information into the equation, and it really does look like we might be able to see a recovery coming ‘round.
When journeying down the long dark road, we must continue on and never give up faith we’ll one day reach our destination – no matter how ugly that road appears before the naked eye. – Reed Murphy