Is The (Real Estate) Sky Really Falling?

"Fasten your seat belts, it's going to be a bumpy night!" [As Margo Channing in All About Eve] -- Bette Davis

Oh come on folks. Don't act all surprised. We’ve known about this for some time: The Burst of the Real Estate Bubble. It came at us in all media formats . . . featured on-line articles, TV, newspaper, blogs, radio commentary. And now folks, it’s here.

Or is it?

It all depends on how you look at it. Certainly, there are some markets across the nation that have become quite stagnant. There are some markets that have slowed. There are some markets that are remaining really hot.

Welcome to the word of real estate: Volatile yet predictable.

Toss in adjectives: Nerve wracking, fickle, cyclical, emotional, fervent and buyers/sellers can panic.

Please do not. Fasten your seatbelts, and try to ride it out as best you can.

The market will rebound, as it always has in the past. In the 1990’s the bursts happened in select cities. Los Angeles was hit hard from a series of events, the lay-offs in the aerospace industry, and the damaging Northridge quake in 1994 didn’t help. Parts of Texas experienced with a flat market when the oil industry hiccupped, etc.

(Personally, I lost about $25,000 in 1995 -- prior to becoming a licensee in 1999. Long story, but it happens to all of us if we’re not shrewd.)

The nationwide affects have been fueled, to a very large degree due to us not budgeting properly, and when lenders teased us with low interest ARM’s (those appealing adjustable rate mortgages) buying above our comfort level seemed like a no-brainer.

Now we are caught with properties at our ankles! Fact is, the ARM’s limited time offers are now becoming due, and in many cases, home values have not kept up, or are declining. Refinancing is tough on folks, and foreclosures result.

Sellers, reevaluate your bottom line. What did you pay for your property? How long have you owned the property? If you bought a place in 2002 for $150,000, and values are now at $200,000 . . . in five years you’ve EARNED $800/month simply by owning the place. Don’t try to sell at $250,000 just because the neighbors realized this 9 months ago. Count your blessings.

Feel free to write me about your situation. I’ll try to help as best I can.

Next week’s article: “How To Goose Your Deal Through to Close”