March 2009                                                                                                                                                                                          

                                                                                   Keeping Perspective

Look beyond the headlines and you’ll see there’s more to today’s real estate market.Today’s real estate market is different than in the past several years, and as a result, some buyers and sellers are cautious to make a move.

But like anything, what we see depends largely on what we look for. Putting things in perspective allows us to look at them with a fresh set of eyes – and a renewed sense of optimism about the real estate opportunities that exist today.

The economy – It’s official; since December 2007, we’ve been in a recession. But according to the National Bureau of Economic Research, this is ninth recession we’ve weathered in the past half-century. Chances are, you’ve missed hearing about some of these cycles along the way, and you fared just fine.

Interest rates – Rates have dropped into the low 5 percent range. Compare that to the double-digit interest rates of the 1980’s – including 17.5 percent in 1982!

Consider this scenario. A buyer purchasing a $400,000 home at a 5.5 percent interest rate translates to a monthly payment of about $2,271. At 6.5 percent interest, a $375,000 home carries a monthly price tag of $2,370 – $99 more, on a house with a lower value.

Money to lend – Contrary to the headlines, lending institutions have mortgage money. While more documentation is required, most buyers with good credit and steady income can purchase a home with 3 to 5 percent down. On some loans, the seller may contribute up to 6 percent to help with closing costs.
Home values – Home values in the Carolinas still lead the nation. According to the Standard & Poors/Case-Shiller Home Prices Index of the top 20 metro markets, Charlotte-area home prices declined 3.5 percent for the 12 months from September 2007 to September 2008. Regions such as Las Vegas and Phoenix saw declines of more than 30 percent. Nationally, all markets saw an average decline of 16.6 percent.
The buy/sell equation – This is a market where you’re going to take less on the sale and most likely, make it up on the buy. And you probably won’t get the price your neighbor did a year ago. But sellers can leverage the equity in their existing home to move up. If you reduce your selling price by 10 percent and purchase a new home at the same 10 percent, you’ll realize a net gain of thousands. And homes in good condition, priced to sell, are selling.

I am very confident that the New Year will bring a stronger, healthier real estate market, with increased opportunities for both buyers and sellers. If you’ve given a passing thought to purchasing a new home in 2009, please give it further consideration. And if now isn’t the right time to make a move, consider a refinance to make your money go further. This scenario of low interest rates and large inventory will not last forever.

It would be my pleasure to assist you with your real estate needs.--Lee Ann Miller  Allen Tate Company

                                                                                               
                                                                                                   704-896-5141
                                                                                           www.LeeAnnMiller.com