Fall Market Update

FALL MARKET UPDATE

“If you're not confused, you're not paying attention." Tom Peters

Dear Friends,

If you have been following the events over the past few weeks, the above quote rings true. Economically, we are moving into unprecedented territory and it is near impossible to predict what will happen next.

The confusion is accompanied by fear and uncertainty. We are worried for our personal and national well being. Will we have a prolonged recession or maybe a depression? Will the government be successful in bailing us out of this mess?

I will leave the answers to the experts! In my opinion, democracy and free market capitalism are the best political/economic systems created by man and I have faith that recovery and prosperity are only a matter of time. In other words, better days are yet to come!

How does this turmoil affect the local real estate market? Well, year-to-date sales (vs. last year) are down by 30%, listings are up by 50%, and prices have dropped about 10%. The market is definitely slower and prices are falling. Here’s the deal: Home prices appreciated a whopping 60% during the years 2004–2007! The average sale price went from $173,508 to $272,256. That pace was simply unsustainable.

Will prices continue to fall? An important indicator of future price movement is the affordability index (ratio of family income to home prices). Ours is one of the worst in the state. According to this important statistic, it appears the buyer’s market will continue as prices slowly move back within reach of the average “local” family. My guess is that this will take a year or more.

Bottom line: In spite of negative headlines and affordability problems, buying opportunities are getting better every day, especially for the “first-time” and “move-up” buyer. Don’t let irrational fear stop you! Heed the words of Warren Buffet: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

If you are pondering the pros and cons of buying or selling soon, give me a call. I am never too busy to help you or your referrals!