The truth about the housing bottom

AP

I have received several comments regarding the housing market, whether we are at the bottom, close to the bottom, or still in free fall.

The truth about the “bottom” is that no one can accurately call the bottom until it has passed, and some areas will bottom out before other areas. There are thousands of analysts and economists out there trying to determine the bottom of the housing market, the recession, the rate of foreclosures, etc. When this recession first started, there were lots of naysayers out there who kept insisting we were not in a recession. If you’ll recall, the “recession” was not officially called until almost a year after it started. The same will likely be true about the “bottom.” What created the recession, the greed and lack of oversight of the big banks and investment companies, AND the greed of consumers, will not be what brings us out of the recession.

The “bottom” of the housing market will probably be as much emotional as it is literal. Most of us are primarily driven by greed and fear. Greed drove us into the housing bubble; greed on the part of lenders and investors to find more ways to make money with their buying and selling of mortgage backed paper, and greed of consumers to get in on the bubble. We’ve seen this before, and will likely see it again.

The truth is that buyers (both those buying owner occupied homes and investors) are moving back into the housing market. I am currently working with more buyers now than I have been working with in the last two years, and I’m not alone. Most mortgage lenders, banks, and realtors will tell you the same thing. While some potential buyers are still waiting, many buyers are making the move now, in case prices really take off, and/or in case interest rates rise. Since none of us has seen or lived through a recession of this magnitude, this is new territory for all of us. But I don’t think anyone can dispute that there are some fantastic house values out there.

Whether you are an optimist or a cynic, in this age of media mania, you will always be able to find information that supports your point of view; just spend a while on the internet, or listen to the information on the news channels. Every point of view is well represented.

By the way, Forbes magazine just released their opinion of the 10 cities in the U.S most likely to see the biggest growth in the next 10 years. Corvalis, Oregon was #4 on the list with a projected growth rate exceeding 4% a year! Does this mean that Portland will lag? Since the Forbes article named only their opinion of the top 10, perhaps Portland was #11? or #50? Perhaps tomorrow another magazine or newspaper will release an entirely different top 10 cities.

Again, I’d like to mention that, for those of you interested in buying a great deal right now, please avail yourself of the information on Investor.com. This site shows you the amount of equity you would be buying based on the current asking price. (This information is derived at by looking at comparable sales).

The best advice I can offer buyers now is to do your due diligence about the value of any property you might be considering purchasing, and to determine your payment comfort level and make sure you don’t exceed that level. The price of a property is not the whole story when it comes to payment.

•  For instance, if buying a condo, remember homeowner association fees.
• • You also should compare tax rates. A $300,000 house in one county could have very much lower or higher taxes than the same house in another county.
  • A house in a flood zone will require flood insurance
  • A purchase with less than 20% down payment will require some type of mortgage insurance (unless it is USDA rural).Be sure to work with a lender to make sure you understand all costs that will be included in your monthly payment.

All the best to all of you, whatever you decide to do. I’m here to help, so please feel free to comment.  I will answer any comments that ask for more information or advice.

Best regards,

Shelby