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Is Another Bubble Forming?
After the housing market bust we experienced across the country in 2008, many experts have been quick to warn that a new bubble may be forming in some areas.
One particular example of this is a recent article pointing toward the California Bay Area’s price gains over the last 18 months.
The quickest and easiest way to show how far we’ve come and how far we still need to go in regards to the ‘Peak’ is to share CoreLogic’s Price & Time Since Peak figures, used to create the map below.
Even with the high performance of prices in the Bay Area, the state of California as a whole is still -14.4% below their Peak, experienced in May of 2006.
The biggest challenge facing the housing market’s recovery right now is the lack of inventory available for sale. Prices are determined by supply and demand. Right now buyer demand is out-pacing seller supply, across many price ranges, driving prices up.
Bottom Line
Traditionally the Spring months have been the most popular dates sellers choose to list their homes. With additional inventory coming to market soon, meet with a professional in your local market to evaluate your best course of action.FSBO’s Must Be Ready to Negotiate
Now that the market has showed signs of recovery, some sellers may be tempted to try and sell their home on their own (FSBO) without using the services of a real estate professional.
Real estate agents are trained and experienced in negotiation. In most cases, the seller is not. The seller must realize their ability to negotiate will determine whether they can get the best deal for themselves and their family.
Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:
- The buyer who wants the best deal possible
- The buyer’s agent who solely represents the best interest of the buyer
- The buyer’s attorney (in some parts of the country)
- The home inspection companies which work for the buyer and will almost always find some problems with the house.
- The termite company if there are challenges
- The buyer’s lender if the structure of the mortgage requires the sellers’ participation
- The appraiser if there is a question of value
- The title company if there are challenges with certificates of occupancy (CO) or other permits
- The town or municipality if you need to get the COs permits mentioned above
- The buyer’s buyer in case there are challenges on the house your buyer is selling.
- Your bank in the case of a short sale
Bottom Line
The percentage of sellers who have hired a real estate agent to sell their home has increased steadily over the last 20 years. Meet with a professional in your local market to see the difference they can make in easing the process.Homeownership is the “American Dream” for a Reason
There has been some who have been voicing doubt as to whether or not the younger generations still consider buying a home as being part of the “American Dream”. A recent study by Merrill Lynch puts that doubt to rest. According to their research, every living generation still maintains that owning a home is in fact important. Here are the numbers:
This should not surprise us as many studies have revealed the benefits enjoyed by the families who own their own home. One such study was done by the Joint Center of Housing Studies at Harvard University that addressed a major financial benefit to owning your own home: forced savings. The report explains:
“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”The Merrill Lynch study proves this point with the following data on home equity (a form of savings):
Bottom Line
There are many reasons that owning a home makes sense. The financial reasons are powerful. As one participant in the Merrill Lynch study put it:“When I was younger, I always worried about that monthly mortgage payment. Now that I am retired, I have the peace of mind of knowing I own my home free and clear.”