The real estate market is a hot topic. With so many people spinning the statistics to help motivate people to buy and sell in a down market, it can be hard to distinguish fact from fluff. I am going to break down just what you need to know about the market and how it can actually affect you.
The fact is, the market is still declining, albeit slowly. The value of homes have stabilized in some areas of Portland, but in general prices are still dropping a little. I expect to see home prices stabilize across the city by the end of next year. The largest factor to stability in the housing market is the presence of third-party homes, these are either foreclosures or short sales. Banks are desperate to get rid of the homes they own so they price them extremely low, this drives down the value of homes in the surrounding area. Once the number of third-party homes begins to drop, the value of homes will begin to appreciate. People are still having a hard time making their mortgage payments because the job market hasn’t really turned around, so we are still seeing new third-party homes every week.
What does this mean for you? If you are thinking of buying a home, now is a great time for negotiating. Most of the people selling their homes, are selling them for a reason. This means buyers are getting a great price and can ask that some of their closing costs be paid for, without any real fight from the sellers. However, this also means that banks are being extremely cautious about who they are giving loans to. If you think you are ready to buy a home, be sure you have a good credit score or a great down payment, or both.
If you are thinking of selling your home, you need to be aware of the houses around you, if you are surrounded by third-party homes, you may have to let your home go for less than you want. Make sure you work with a realtor who will negotiate the value of your home to get you the best possible price. Most people are talking about the nightmare of selling homes in this market but the truth is, well priced homes are selling quickly.
Another hot topic in the real estate world is interest rates. Though the slight fluctuations in interest may seem unimportant in your decision to buy a home, they make a huge difference in the overall price. Interest rates are hovering around 5%, they have gone up about a half percent since the beginning of the year. This seems like a very small number but if you consider a $200,000 house with a 30 year loan, someone who bought that home at the beginning of the year will, on average, pay about $30,000 less than someone purchasing now. Interest rates shouldn’t be at the top of your list for reasons to buy, but it should be in the top 5. Interest rates are ont of the largest reasons people are saying now is the best time to buy. Rates will likely begin to increase quickly over the next year and stabilize around 6%. If you are thinking of selling your home but don’t want to, you can re-finance your home at the low-interest rate and lower your monthly mortgage payment.
There are of course other topics being discussed revolving around the real estate market but these two are the most talked about and the least understood by consumers. If you have any questions feel free to e-mail me, and as always. Live Lively!