If the Price is Right
December 4, 2008
There seems to be a characteristic of all markets - when prices are seen as bargains, people want to buy. One has only to read the assessments of the retail activity on Black Friday. Folks went to the stores in the wee hours of the morning to wait in line for the "door-busters". Generally the sales were better than expected, but the retailers interviewed by the media claimed it was the heavy discounting that stimulated the buying activity.
The same increase in activity seems to occur when stock prices fall dramatically, buyers come back into the market.
The real estate market is no exception. As prices have declined and bank-owned properties have been put on the market at attractive prices, multiple offers occur. With real estate markets, there is the additional factor of credit. With the losses suffered by many investors, loan standards changed and the number of qualified buyers diminished. What is remarkable is that given the prices of many properties, there were sufficient qualified buyers to double and sometimes triple the number of sales over the 2007 market. Price is clearly a motivating factor.
As I post this blog, three very positive developments are very likely to stimulate buyers to purchase homes in the next months. 1) Home prices have generally receded to 2003, 2004 levels. 2) Mortgage money is available and the available limits are adequate for the prices. 3) Interest rates are at record low levels (I heard this morning that 5%/30 year fixed loans were being offered.).
It certainly looks like "The Price is Right".
There seems to be a characteristic of all markets - when prices are seen as bargains, people want to buy. One has only to read the assessments of the retail activity on Black Friday. Folks went to the stores in the wee hours of the morning to wait in line for the "door-busters". Generally the sales were better than expected, but the retailers interviewed by the media claimed it was the heavy discounting that stimulated the buying activity.
The same increase in activity seems to occur when stock prices fall dramatically, buyers come back into the market.
The real estate market is no exception. As prices have declined and bank-owned properties have been put on the market at attractive prices, multiple offers occur. With real estate markets, there is the additional factor of credit. With the losses suffered by many investors, loan standards changed and the number of qualified buyers diminished. What is remarkable is that given the prices of many properties, there were sufficient qualified buyers to double and sometimes triple the number of sales over the 2007 market. Price is clearly a motivating factor.
As I post this blog, three very positive developments are very likely to stimulate buyers to purchase homes in the next months. 1) Home prices have generally receded to 2003, 2004 levels. 2) Mortgage money is available and the available limits are adequate for the prices. 3) Interest rates are at record low levels (I heard this morning that 5%/30 year fixed loans were being offered.).
It certainly looks like "The Price is Right".
posted by shirley harry at 8:38 AM
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