Vision of Real Estate

As a top producing agent in the area, I am struggling to get a grasp on our "new" economy. My friend said it was like Star Trek's Enterprise, "going where no man has gone before". The economy we are in and the reasons we are here are new, and the outside factors (international dependence) are new as well. There are a few things about the new economic environment I have observed:
I am currently working with several qualified homebuyers. That fact should translate to several lucky sellers. Surprisingly, that is not the case. My buyers made an excellent offer but were driven away due to the seller's warped perception of the market. I am not implying that all sellers must work with all buyers, but in this current economic climate, the consumer should understand that this kind of market is unprecedented. In Lexington and Richland County, as in other parts of the country, sellers have to face the fact that retail values are now set by the buyer.
Sellers need to understand the definition of Mark-to-market valuations as it applies to real estate. Mark-to-Market methodology of assigning a value to a home position is based on the current market price (what a consumer will pay). Example Bank of America Stock bought for $15.00 a share a year ago is now trading for $5, 00 a share. What is the Market Value? It is $5.00, since that is what people will buy it for.
Looking at the economics of Lexington and Richland County, they vary drastically from the rest of the state. An important economic factor such as state unemployment increased to 8.4% in November 2008. This is half a point above the revised rate of 7.9% in October and the highest rate since September 1983. South Carolina has been one of the hardest-hit states in terms of unemployment during the recessionary period of the past year. The lowest unemployment for the state is Lexington County (6.0%) followed up by Beaufort County. Richland County was near the lowest in unemployment (7.2%).
In the 1970's there was little change in house sales. In the early 1980's there were deep cuts in housing sales. In the early 1990's there were medium cuts in housing sales. In the 2000's there was a spike in housing sales. Some factors that will cause these numbers to change will be left up to the consumers, who must strengthen their balance sheets with slower spending and greater saving. I feel reduced consumer spending will produce a significant drag on economic growth throughout 2009. Although the economic growth may be slower, the consumer belt tightening should increase savings providing down payments and funds for buying homes. It will take some time to see the desired effects of consumer savings on the real estate market, but it will come.
Stocks, bonds, and 401K are down, but statistics show that values of the average portfolios are in the same value as in January 1999 and January 2004. That indicates that we had a lot of growth and the values are correcting themselves. Another variable that is dropping is amount of inventory in new construction. There has been a large decrease in building of spec homes throughout the country. I can only speak for what I know in the Columbia, SC market. Builders are doing what they can do to decrease current inventory. Banks are doing what they can to limit them in the amount of loans they will give to builders. Consumers are shopping for deals in new construction and resale's. My concern in the area of new construction is homes that are not 100% . The homeowners struggle to find financing to complete and warranty it. Time will tell on this issue.
With all of the negatives previously mentioned, the silver lining to this dark cloud for the consumer is this current market offers the best opportunity in the last 5 years to buy a home. The reasons it is a great time to buy are: First there is more inventory to choose from now than there was ever before. Then pricing and condition become weighted more than ever, which will separate homes between on the market and sold. Secondly if you want to move up and are concerned that your present home won't sell for what you want, don't worry. For example your home is worth $100,000 last year; you are only able to sell your home for (90%) $90,000. Your loss is $10,000. Your move up home is listed at $150,000 you get it for $135,000 (90%). Doing the math, your net to the good is $5,000. Moving up in a buyer's market works for move up consumers. Thirdly if you qualify for the Federal Tax Credit of $7,500, in most circumstances, it covers your down payment and closing cost. The benefit to that credit is it can be taken in Tax year 2008 or 2009. The form needed is IRS Form is IRS Form 5405.
In conclusion with great interest rates, volume of inventory and people willing to work with buyers makes now the time to buy! That is why my local Home Builders have created, Build Now Buy Now Campaign to encourage homeownership. There is also a great campaign to help the economy stimulus called A plan to fix Homeownership First. Are you ready to buy a home?
Edwin Gerace ,http://www.609sold.com/, http://www.edwingeracesrealsestateblog.com/