The Housing Market and the Weather

Whither goes the housing market? Right now, you could compare it to winter weather. Will it rain or snow? Surely it will—but when? Whether to wait for lower prices or buy now during another dip in mortgage rates, to sell now or wait for the inevitable rise in property values are questions faced on both ends of a real estate sale.

What we know are the following facts:

  1. Production of new homes is down approximately 25% countrywide, to a rate far below industry standards. This leaves fewer new homes available on the market in an effort to increase demand.
  2. The sales of existing houses are down, but not excessively. In 2005, some 7.1 million used homes were sold and in 2006 sales are expected to peak at 6.5 million. That rate represents a relatively small drop is much closer to typical annual home sales. The market has exited a sales boom, but is not in a collapse.
  3. 30-year mortgage interest rates are currently at their lowest level since the start of 2006. Loan applications are down, however, which leaves loan agents and agencies eager to deal with applicants, creating a better loan market for savvy buyers.

What this can mean for most sellers is that while your property may sell for less in 2007 than it might have in 2005, you are still likely making a large profit on any property purchased before 2000. You have less competition from the new housing market. Loans are available for buyers. Houses are still being sold at historic rates.

For buyers, you should have little trouble securing a loan. Financial difficulties for some have created a large foreclosure market, which you can discuss with your real estate agent. You can be patient finding your “perfect” home, because there is far less sales pressure in today’s real estate market.

While we may or may not have hit the real estate market’s “bottom,” the opportunities for sales and finding quality properties for purchase are still there, just as ever. You can let the pundits argue the direction of the graphs and arrows. If the right time has come for you to buy, take advantage of the interest rates and price dips. If you need to sell or move on to other opportunities, take heart that you can still net a reasonable profit. Don’t get too caught up in predicting the weather of real estate sales.