Housing is in the tank --- (but what about the buyers?)

The word is out.  Housing is in the tank.  Never will things be the same as they were. Prices are falling, foreclosures are climbing, gloom and doom abound, and so on and so on.  And this current situation is supposed to be completely different from anything that has happened before!  “It’s never been like this before” is commonly heard or read today…

These are some of the common thoughts describing the housing situation currently being experienced throughout the country, and in some parts affected more than others.  Prices have fallen, fallen, fallen, and the bottom doesn’t seem to be in sight.  Equity has in some cases evaporated, loans are adjusting to unreachable payment levels, and everyone is sitting around reading story after story about how bad things are or how bad things are going to be.  But is this for the whole population of houses?

As always, nothing is exactly as it seems.  As in the lines of gloom and doom above, there is a silver lining and a benefit to some one important portion of our population.

In perspective, the current housing situation is a boom to the first time buyers, and a benefit to anyone who wants to own a house as a place to live.  Prices are down to the point that payments for home ownership rival rental rates.  That happy bit of news assists the buyers in many significant ways, most noticeably that they can buy more of what they want, more of areas and locales that interest them the most, more of nearby amenities for comfortable and enjoyable living, and more of the benefits of home ownership including probably several enjoyable tax advantages for most people.  In short, the drop in the value of housing in many parts of the country, has made housing available to a group of buyers that can take advantage of the price level. 

For those who are unable to recall, real estate values move in cycles.  Sometimes up, sometimes down, depending upon many factors that affect value.  Those factors can be interest rates, transportation rates, amenities, construction scarcity, surplus of supply, general economic conditions, employment factors of the area, jobless rates, and so on.  What comes down goes back up, and what has gone up, might come down again.  The net change is the most important thing to remember.  In the past many years, the overall trend has been for prices to rise up to some pretty high levels.  Adjusting for inflation is  important, but even after adjustment, it would be prudent to say that housing prices are generally higher than in decades past.  Price stability has been clustering around an increasing value line, with “peaks” and “valleys” depending in part on the factors above.  Right now, one serious “valley” has been caused by irrational lending practices, unscrupulous or unaware lending officers, unqualified buyers tied to contracts that become impossible to maintain, and some pent up demand “bidding” price levels to hard to justify price points.  Obviously that scenario is no longer working.  Transactions now need to make sense on many levels.

Professionals in real estate such as brokers, agents, loan officers, and appraisers will have to work much more carefully with the information they have about the values of houses and homes.  Buyers will need to be qualified more diligently, but they can still reach out for attractive loan terms and doubly attractive home pricing levels, right now.  For the persons who need and want to live somewhere choosing a house to make into a home, those choices are still great, maybe greater than ever due to the drop in pricing. 

No more should unqualified people be placed into untenable loans, or payment situations just waiting for the “other shoe to fall”.  The words “subprime” loans relating to the lending practices that began this down cycle, have disappeared from legitimate lender’s vocabularies, and probably were never there to begin with.  Loan interest rates need to be correct for all of the income factors of the buyers. 

In a predicted amount of time, the inventory of available real estate and houses can be reduced to a more manageable level.  Sellers will have to have patience, but they do have improvement coming.  Gloom and doom aside, the buyers of today are in a very important and very attractive position.  They just need to recognize it and work with highly qualified and ethical professionals to secure the kinds of transactions that will benefit them over many years, in this “greatest of all investments…one’s home”. 

As the cycle repeats itself , they will be very glad they made a choice to became “buyers” and “homeowners”.  Likewise, sellers of all kinds will see a market that gives them fair value for their property, and an ability to reach their goal whatever it may be.