But wait, they are back! Back for a whole different set of reasons, but they are popping up once again for those properties that are priced right, de-cluttered, and memorable. “What is causing this?” you may ask.
- Historically low interest rates with the threat of rising up to 2 points.
- Better educated buyers and sellers recognize that they can sell low and buy low, which is the opposite of 2006 where we sold high and bought high.
- Unrealistic sellers have withdrawn, leaving the serious players on the field.
- The recognition that prices will once again rise in 2013 and the bottom is now. (In fact, it was in Nov. 2010)
Is this the tipping point we’ve been waiting for? A story that ran in Bloomberg last week seems to suggest “yes”. A strong community of job creation is helping some areas and regions of the country like ours move quicker.
Another unique opportunity is presenting itself. Within communities, if for instance someone always wanted lakefront but affordability found them 3 rows back, many are now selling low and buying low to get front row amenities. Cost vs. Price is what is driving this new activity. To wait for prices to drop another 1-3% will be eaten up by an interest rate jump which is inevitable. It’s just a matter of when and how much. History shows that when rates hit a historical trough that they can go up as much as 2 points.
All this does not mean a boom frenzy. What is says to me is homeownership is still alive and well in America. As rents get even higher, it creates upward pressure on prices which eventually leads renters to homeownership.
By Pat Riley (President and Chief Operating Officer)