Getting Back To Normal

We've had quite a climb up for a while in the real estate market, and while we were up there, the air was pretty rarified. But after a while we have to come back down from the peak to a plateau. In other words, back to the normal view of the market.

Such has been the residential real estate market for the last five years. In our area, we reached the top of the peak at the end of 2005, and all the way down from the peak, the media has chronicled every decline worrying sellers and buyers.

The latest Case-Shiller Home Price Index shows that house prices have dropped 31% since the peak almost four years ago. That statistic sounds shocking, however, the report shows home prices have simply returned back to the March 2004 levels when homeowners were very happy with the value of their property. We need to remember in just the 18 months from March 2004 to September 2005, there was a sharp 41% increase in prices due to very low inventory. So a drop to 2004 price levels is more like getting back to normal.

Another big factor in enabling this return to a more "normal market", is the tightening of the mortgage lending qualifications. Many lenders, during our boom time, ignored qualifying ratios and down payment requirements We now understand that returning to previous reasonable standards is prudent. With a return to these standards and lenders willing to lend, the historically low interest rates are making today's mortgages even better than normal.

These and other factors are the reasons that a recent Gallup poll found that 71% of Americans think now is a good time to buy a house. Now might be the right time for you!