'Real' Real Estate Market
While I agree with some of what was said about the real estate market ("3V better off than most but are prices leveling?" Jan. 6), there are a few points I would like to add.
I realize that the audience was most likely present area homeowners and perhaps a few home sellers or those contemplating selling. In my view the seller's predicament was seriously understated and the buyer's position was misstated at best.
The starting point of a successful real estate transaction is the listing of the property. Too many of us know a realtor friend with whom we list our property without much comparison shopping. Comparison shopping affords several realtors the opportunity to make a compelling case for effectively marketing the property. In this type of real estate market the seller is well advised to shop and ask the realtor to provide more than a comparison of the seller's property with similar properties that recently sold.
Real estate is largely driven by supply and demand. For a seller, in today's market, the number of local foreclosures is important, but a more important focus is the overhang of potential foreclosures in the market. With a national unemployment figure at nearly 10 percent, how many local homeowners are more than three months behind on mortgage payments? The banks are not motivated to proceed with foreclosures because they know that the effect of that action will be devastating to many local economies. These potential foreclosures, involving homeowners who need to sale and who might flood the market in the spring, could dramatically increase the supply or inventory of houses for sale. This will create more downward pressure on prices in an already buyer's market.
Without a buyer and seller, there is no transaction. There is a large pool of buyers waiting on the sidelines for prices to bottom out. The recent rise in mortgage interest rates has prompted many of them to become more active in the market. While sellers concentrate on price, buyers concentrate on cost. The monthly cost to a buyer for a 30-year, fixed-rate mortgage is about equal at 5.75 percent for a $360,000 loan compared to a 4.75 percent rate on a $400,000 loan. As buyers realize the effect of the low but rising interest rates, they can offset a lot of price/inventory pressure in the market.
So where are we? There is pent-up demand, oversupply in the market and rising interest rates. Houses will be sold, houses will be bought. Sellers need to make sure their house is effectively priced versus the six others like it in the market.
Licensed Sales Agent