Melissa Jarecke

Melissa State of the Market Opinions

"So, what do you think about the market?" Over the years, that is the question I have been asked most often. And with today's environment, I am asked that question more than "How have you been?" Everyone is interested because for most of us, our home is our largest investment. Having a home paid for or having affordable payments is probably the most important element of a comfortable retirement program. Watching our equity grow in our home (real estate investment), has been the most dependable contributor to increasing our net worth. Real estate has been such a solid investment in the Omaha area that it seemed almost bankable that prices would never go down.

While we watch the value our stocks, mutual funds, IRA's or 401K's deteriorate on a monthly basis, we understand that stocks go up and down. We watch the interest we can earn on savings reduced to 1 to 4 percent and that seems reasonable when the interest rates we pay are so low. Yet we don't apply those same principles to real estate investments. But just like stock investments are "just on paper" and don't affect us unless we sell, the same is true of our real estate investments.

I have always said that trends begin on the coasts and work their way to Nebraska. The good ones make it here and the bad ones fizzle out. Never has that been more obvious than this last year. The difference today is we have 24 hour news on a multitude of channels telling us how bad everything is in other states. We are not an isolated island in the middle of the country anymore, but Nebraska is so much more stable than most other states, it is almost like we are different countries. But if the fear that we hear about other areas causes buyers not to act here, our market is affected.

This is not California or Michigan or Arizona. Those states, among some others, are very volatile. Their home prices spike up and down. That has never been the case here. Our prices may rise slowly or quickly or plateau. When I was a new agent, I asked a gray haired broker, "But prices go down sometimes, don't they?" He said, "No." I said, "But my stepfather said during the depression, you could buy any home in Country Club for $9,000." He said, "Yes, but they were built for $7,000." We may not be able to sell our homes today for the same price as last year or the year before, but that is a first for the Omaha area. Real estate is the most forgiving investment we make because time corrects even a "bad" investment. We have time on our side and time dictates that prices go up. Real estate is the best hedge against inflation there is. And where else can we lock in an interest rate for 30 years. I do predict that once we get through this international recession, we will have rampant inflation. The value of the dollar will go down, the value of our homes will go up and yet our payment, the principal and interest, on our homes is fixed for either 15 or 30 years.

Usually when interest rates are low, our prices rise. When rates are high, our prices plateau. This is the first time in my 40 years of selling real estate that both prices and interest rates have been low at the same. This is the best market I have seen for buyers in 40 years. Sellers may take a little less for their homes, but if they are buying up, the difference on the buying side will more than make up the difference. There is also a good chance the interest will be less than what they are currently paying.

If the Congress passes a good incentive program for home buyers and if interest stays around the 5% mark, this market could be corrected almost over night.