Current Myths About the Housing Market - Page 2
9 MYTHS ABOUT THE CURRENT HOUSING MARKET
Myth 1 - High-to-low home price declines have been about 20%. Nope.
The measurement of home price declines can be misleading. It depends on which homes in which markets are being measured. There are some indexes that indicate home prices are down 20%. Theses indexes are heavily weighed toward homes with sub-prime loans and other distressed home sales. These troubled homes have experienced a steeper decline than home prices in general. Both government data based on loans backed by Fannie Mae and Freddie Mac and data from the National Association of Realtors suggest much more modest price declines. If you're selling your home, the best thing to do is price your home right.
Myth 2 - The smaller number of new homes under construction indicates a dismal outlook for the housing market. Incorrect.
The inventory of homes on the market is very high, so the last thing we need now is more new homes being built. Home builders have cut back sharply on production, which will help lower inventories and stabilize prices. With many new homes completed but not sold, you can find great deals.
Myth 3 - When the housing market recovers, home price growth will be only 4 to 6% per year
The price growth of up to 6% can easily turn into 20 to 30%. Most buyers put less than 20% of their own money into a home purchase; this borrowing power can translate to a greater rate of return. On average, home price appreciation has been about 1 to 2 percentage points higher than consumer price inflation, which translates to up to 6% per year. This growth rate cannot be compared to a rate of return like the stock market, being that most people do not buy a home for all cash. Instead they make a cash down payment & borrow the rest. The leverage this borrowing creates can greatly impact returns. Get the fundamentals right when investing in real estate.
Myth 4 - Impending baby boomer retirements and moves to small homes will cause a glut of homes on the market. Not True.
The first wave baby boomers has reached 60 years of age and the bulk of that generation will soon go into retirement. Contrary to the belief that these boomers will trade down, many are keeping their current homes or moving to properties of the same size or larger. In the future, if the boomers do decide to sell their larger homes, then the rapidly growing U.S. population should absorb the supply of existing homes on the market.
Myth 5 - The federal government takeover of secondary mortgage companies Fannie Mae and Freddie Mac is a bailout that will cost taxpayers bundles.
It's possible that taxpayers may have to cover some losses OR that the government takeover will result in no loss of taxpayer dollars. If taxpayer funds are used, the bailout would be preferable to the global economic problems that would have occurred if Fannie and Freddie had gone belly up. The "bailout plan" is meant for homeowners facing foreclosure. If you would like to know more about the Hope for Homeowners Plan, contact me at your convenience, at (843)907-8787.
Myth 6 - The Federal Reserve controls mortgage rates. Wrong.
What the Fed sets is a short-term interest rate called the Federal Funds Rate. Mortgage rates are determined by global savings, credit spreads and inflationary pressures. Over the past two years, the Fed has raised the Fed Funds Rate to 5.5%, and then cut it deeply to around 2%. All the while, the 30-year mortgage rate has averaged in the 6 to 6.5% range. Today's rates aren't bad compared to the 10% we saw in the early '90s and 17% in the '80s.
Myth 7 - It's the wrong time to buy. Wrong.
All real estate is local. For those who are financially and mentally ready to buy, there has never been a better time to be a buyer. Very low interest rates and a surplus of inventory give buyers an edge. For someone with a long outlook, there is very little worry about home values since homes have historically provided a solid foundation for wealth accumulation. Keep in mind that is also not the right time to buy for everyone. Even when good buying opportunities are presented, someone who is not financially ready shouldn't be forced into joining the rank of homeowners. The decision to become a homeowner requires sacrifices, and homeowners who lose their homes to foreclosure is not good for anyone. Take a good look at your financial status to see if you're ready to buy or move up to a home of your choice.
Myth 8 - It's a terrible time to sell. Wrong.
A seller can get an offer if the property is priced right. In our local market, home sales are steadily increasing. For those looking to trade-up, selling low on an existing home is offset by buying the new move-up home at a lower price. In turn, the price appreciation on the trade-up home will bring bigger bang for the buck. TIP: Homebuyers want bargains in this market. If you price your home much lower than your competition, you might end up with a bidding war.
Myth 9 - More homes are being sold by owners, and real estate agents are becoming obsolete. Nope.
The share of home sellers who choose to go it alone when selling their home has actually decreased to about 12% today. On average, only 4 in 10 say they would sell their next home without the assistance of a real estate professional.
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1217114- Class:
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- Status:
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- Present Use:
- Other
- Est Lotsize:
- N/A
- Class-Type:
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View Listing - MLS#
- 1106481
- Class:
- Land
- Status:
- Active
- Acres:
- 20.00
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- MLS#
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- Class:
- Land
- Status:
- Active
- Acres:
- 189.00
- Est Lotsize:
- N/A
- # Of Lots:
- N/A
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- MLS#
- 1302768
- Class:
- Commercial/industrial
- Status:
- Active
- Present Use:
- Office/Warehouse
- Est Lotsize:
- N/A
- Class-Type:
- Retail
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Virtual Tour - MLS#
- 1302707
- Class:
- Residential
- Status:
- Active
- Beds:
- 6
- Baths:
- 6 Full / 1 Half
- Class-Type:
- Detached
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- MLS#
- 1108431
- Class:
- Residential
- Status:
- Pending Contingent Contract
- Beds:
- 5
- Baths:
- 5 Full / 2 Half
- Class-Type:
- Detached
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- MLS#
- 1301893
- Class:
- Commercial/industrial
- Status:
- Active
- Present Use:
- Restaurant
- Est Lotsize:
- N/A
- Class-Type:
- Commercial
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- MLS#
- 1308890
- Class:
- Multi-family
- Status:
- Active
- # Of Units:
- 42
- Est Lotsize:
- N/A
- Class-Type:
- Apartments
- MLS#
- 1212609
- Class:
- Land
- Status:
- Active
- Acres:
- 4.60
- Est Lotsize:
- 365Fx643Lx395Bx616R
- # Of Lots:
- N/A
A DEVELOPERS DREAM IS NOW A REALITY. Located in the heart of Pawleys Island and one of the last available creek front properties. It is currently...
- MLS#
- 1101787
- Class:
- Land
- Status:
- Active
- Acres:
- 58.70
- Est Lotsize:
- N/A
- # Of Lots:
- N/A
REDUCED!!! Amazing Development opportunity to purchase 58+ acres of land in North Myrtle Beach. This property was just annexed into North Myrtle ...
- MLS#
- 903051
- Class:
- Land
- Status:
- Active
- Acres:
- 6.30
- Est Lotsize:
- N/A
- # Of Lots:
- 2
6.3 acres of highway commercial property in North Myrtle Beach within 1 mile of K & W Cafeteria, Outback Steakhouse, Filets & Bob Evans restaurants...
- MLS#
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- Class:
- Residential
- Status:
- Active
- Beds:
- 5
- Baths:
- 5 Full / 5 Half
- Class-Type:
- Detached
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- MLS#
- 1207801
- Class:
- Residential
- Status:
- Active
- Beds:
- 5
- Baths:
- 4 Full / 3 Half
- Class-Type:
- Detached
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- MLS#
- 911709
- Class:
- Commercial/industrial
- Status:
- Active
- Present Use:
- Other
- Est Lotsize:
- N/A
- Class-Type:
- Commercial
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- MLS#
- 1302558
- Class:
- Commercial/industrial
- Status:
- Active
- Present Use:
- Other
- Est Lotsize:
- N/A
- Class-Type:
- Mixed Use
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- MLS#
- 1119324
- Class:
- Residential
- Status:
- Active
- Beds:
- 5
- Baths:
- 5 Full / 1 Half
- Class-Type:
- Detached
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- MLS#
- 828503
- Class:
- Land
- Status:
- Active
- Acres:
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- Est Lotsize:
- N/A
- # Of Lots:
- N/A
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- MLS#
- 1010147
- Class:
- Land
- Status:
- Active
- Acres:
- 2400.00
- Est Lotsize:
- N/A
- # Of Lots:
- N/A
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- MLS#
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- Class:
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- Status:
- Active
- Beds:
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- Baths:
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- Class-Type:
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- MLS#
- 723002
- Class:
- Residential
- Status:
- Active
- Beds:
- 5
- Baths:
- 5 Full / 1 Half
- Class-Type:
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