There is good news and bad news in the current real estate market. February numbers are in for the Birmingham market, and the average sales price, compared to a year ago, has dropped from $186,311 to $178,600, although “DOM” (days on market) has also dropped from 113 to 90, indicating brisker sales, according to Dave Mace, at the Birmingham Association of Realtors. He also said that total sales in the Birmingham MLS in February were 979, compared to 1,250 in February, 2007. The median home price has stayed the same. Homes in lower price brackets tend to turn over faster than the $300+ price points, in my experience.
NOW IS A GREAT TIME TO BUY. The selection is amazing, in both new homes and re-sales. Interest rates remain low. The limit on FHA loans has increased to just over $178,000, and, while subprime loans and other risky mortgage products have all but disappeared, more buyers will have access to these safer FHA loans and other lower-interest rate loans in high-cost areas, according to Mace. On the other hand, by the end of March, 100% financing will virtually disappear. We have heard the new max will be 97%.
Yet many buyers seem to be holding out. For what? Are they expecting further dramatic decreases in home prices?…more desperate sellers trying to dump their homes at any cost hoping to avoid foreclosure? (well, yes, there’s always some of that going on…) Wayne’s personal experience has been that buyers have so much to choose from right now that they are looking…looking…looking…for exactly what they want (or for a fire sale on something close) but remain very slow to make offers. Frequently the offers they do make are so low that sellers, realistically, can’t even consider them, so they are, essentially, a waste of everybody’s time, and never result in a binding contract. Other Realtors® have said to me that they think buyers’ expectations may be somewhat unrealistic, in terms of what they can get for the money. Sellers who are anywhere short of facing impending foreclosure may be willing to reduce their profit, but are not going to suffer a loss on their property. While it may be that sellers don’t really expect full price offers in this market, it is so competitive that many have cut their asking price to very near their bare bones minimum. To take much less could mean a loss, and if they DO have to take a loss, it won’t be a very big one.
Bottom line? There will probably not be, in the foreseeable future, a better time to buy than now. Inflation, rising costs of construction, and the state of the economy (are we in a recession?) are all still pushing up the cost of housing over time. Who knows where interest rates will go, but they probably won’t go a whole lot lower. Good, safe loans are out there for those who qualify. The selection is way more than adequate. So IF you are serious buyer, now is the time. But be realistic when you make an offer, whether to a re-seller or a builder. The myth that you’re going to get something for half of what it’s worth is…at least 98% of the time…just a myth. The standard for sellers a few years ago was to seriously consider an offer down to 97% of asking price. It may be lower than that now, maybe 94-95%. But sellers have already come way off the price they want, and have less room to dicker. Birmingham is NOT Detroit, South Florida, Las Vegas or Silicone Valley. We never really had a real estate bubble, and the bubble has not burst. Our home price appreciation over the years has remained realistic, at an average 3-5% per year, not 3-040%; so housing here is not dramatically overpriced, even for today’s market. So buyers AND sellers have to use reason in cutting deals that can actually work.
Come “off the sidelines” and Buy something. You’ll be glad you did. So will I.! And, by the way, one way to get an even BETTER deal on the home your buying is to take advantage of the unique Buyer’s incentive program that we offer our buyers. Check it out on our website. We can, literally, put THOUSANDS of dollars back in your pocket when you close on your next home.
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