Jim Valentine on Real Estate
Real estate markets ebb and flow like a good tide pulled by the gravity of the moon. Sometimes it seems as if the market is affected by the moon, the same moon that makes wolves howl at it. In reality, there are so many other things that contribute to the constant fluctuation. Northern Nevada real estate has steady demand for its many positive attributes, but there are many things that impact the decisions of buyers and sellers to sell/buy or to not sell/buy.
When the buying activity stalls we look for answers. What is causing it? We know that interest rates have been holding near 7%. That stalled the market. Lo and behold, the rates dropped in the past couple of weeks to 6-6.5% depending on the loan program. Many sellers are still offering contribution to the buyer so they can buy their rate down. That initiated when rates are higher which means the recent reduction in rates will either give the buyer a great buy down rate rather than an acceptable rate, or they can buy it down some and use the balance of the contribution for closing costs.
The inventory is still low for a couple of reasons. Sellers don’t want to give up their 2.5-3% loans and go into a 7% loan situation in their replacement property. That has kept prices up until now as the have-to-buy buyers have acted. Most buyers today want to buy and are selective in their selection. Homes on the market are seeing their prices drop. Not hard or fast, yet, but they are being reduced.
Our plan to have people take their 2.5% loan with them to the next house would work, but nobody out there has implemented anything along those lines. We’d like to see a program where you could get an appraisal on your new home, pay a couple of points and have your loan moved to your new property. That would open the market for buyers and sellers. Until then, remember that many of those low rate loans are assumable. That means you can qualify for it and assume that loan at that rate. You might pay a bit more for the home, but your payment will be reasonable.
Elections come into play when there are economic concerns. We are in such a situation now where people are watching the politicking and wonder what will happen in November. Some are pausing their real estate activities until they see election results. If you are one of them, remember, there are like-minded people out there. If you act now you will likely not have them competing with you to sell or buy. Wait and you might find the market glutted by people like you acting like you.
What can change to affect the market? The price of oil has a major impact on development and building. Operating big equipment, shipping heavy loads, manufacturing roofing and flooring, etc. As long as replacement costs are high home prices will be high. If there is a change in oil pricing you may see an adjustment in home pricing.
Real estate will always ebb and flow relative to the “middle ground” of the era in which you are working in. Today’s real estate not only has a confusing financial component, the industry is having a major change in basic practices on Aug. 17. Experienced buyers and sellers are going to learn a new way to conduct their real estate activities, as are the agents. Good luck all!
Don’t try to time the market. Like stocks, timing the market is like catching a falling knife. Make your plan, study the market, work with your agent and do your business. It is a long-term investment. You have plenty of time to have things work out well for you. You are either looking to enjoy your new home or moving on to a new home. Either way, get it done and move on with your life. Don’t let a market trap you.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, License No. BS-03481, RE/MAX Gold Carson Valley 775-781-3704. dpwtigers@hotmail.com