Tuesday October 27, 2009
What is the value of your location, convenience and comfort?
I ask because it appears in real estate the Pendulum has swung. Let me explain. From 2000 to 2006 the real estate market was a seller’s market. No rocket science there. During this seller’s market the seller abandoned reason to make the deal and push the product. In pushing product, the seller bought more land and lots than they could physically absorb, should the economy even have a small “blip”.
Sure enough, the law of supply and demand turned into a volatile raucous demon and the sellers were caught, many enduring disaster. Interestingly enough most sellers did not catch on to the changes until 2007 when absorption rates were saturated, stagnate and like over ripe tomatoes, molding on the vine.
What caused it? I would venture to say the desire for a quick return on investment, greed. I remember all too well the conversations with buyers as they stated to me they were looking to buy the home as an “investment” or were worried about something because it might hurt “re-sale value”. Those days were certainly filled with optimism and risk taking. Sometimes the risk was greater than any reward could possibly bring.
Why the history? According to many annalists we are now on the flip side of the coin in a buyer’s market. From the research I have done and from the words of annalists, the peak of the buyer’s market appears to be back in May of 2009.
Interestingly enough it appears that inventory levels have dropped down to more realistic absorption rates and continue to drop. Some moderate appreciation is appearing on the scene. The disconnect is where the buyers are right now. The buyers are out seeking property, but not with the traditional views in mind. In fact location, comfort and convenience seem to be left out in the rain abandoned to their fate while the all elusive deal is stomped into the mud.
Mind bogglingly enough the real pursuit is to steal the best deal possible. I equate the steal with retailer going out of business and the consumer’s swooping in to scoop through the piles of goods looking at all the tags and only buying the products that are 85% off. No regard being given to the actual product, only the discounted priceIt seems that history is repeating itself, but this time they buyer is the one making the call. The bottom of the buyer market has passed. There still are some opportunities out there for the savvy buyer, but the real deal is one where location, comfort and convenience take higher precedent than the deal. A word to the wise, the best deal out there is the best deal because it has to be to sell it. I encourage you to buy wisely with the deal as one criteria, but not the only criteria.
Don’t let the volatile raucous demon make the decision for you. What is the risk of buying a distressed home? What can be the reward? Buy wisely
If you are a buyer in today’s market, how are you judging value? I would love to hear.