Saturday, March 14, 2009

It's a buyer's market alright, but where are they hiding?

The other day I was plodding along filling out an application to become a listing agent for Fannie Mae's REO market. I was asked for total sales volume and units for 2008. So, I pulled up the latest statistics from our market center and was pleasantly surprised to learn upon researching reports that our Keller Williams office did $168,092,064 in total sales volume with 496 units sold in 2008. This places us at the #1 position in our target market from the previous 4th position. I sat back, smiled and breathed a sigh of relief. The sky was not falling today as the media so forcefully implies in daily broadcasts. I can still afford San Pellegrino in a glass bottle and so life moves on.

New England has pretty much bottomed out in the market correction, and yet the North Shore of Massachusetts seems relatively unaffected. MLS market reports show sold statistics somewhere between 2003-2005 values, which is not all that bad. So why are there still a plethora of inventory on the market? Why are the majority of buyers cooling their heels still?

Here are the top 5 reasons:

- Lack of consumer confidence. If you are living in fear that the sky will fall, then write your epitaph now. The best buys are out there NOW. Don't miss out. Invest in America. This will stimulate the economy more than waiting under the proverbial bomb shelter or for handouts that may not apply or may never get to you.

-Myth or urban legend? Shut your televisions off folks...there are plenty of lenders who are lending money. True, the lending qualifications are a bit stiffer...but it's a good thing. No one will be buying something they cannot afford. Rates remain the lowest in nearly three decades. It's time to put more than your big toe in the pond. Go ahead, jump in and get might like what you find out!

- Can we get further clarity on the stimulus package? I hear this from many colleagues and clients. There were a few last minute changes to the tax credit for purchasing a home. At last glance, first time home buyers will really make out well. If you are a first-time home buyer and you purchase your home between January 1, 2009 and by November 30, 2009, you will receive a tax credit (this is not something you will have to pay back to the IRS like last year's provision). The key here is to understand how the tax credit works. Please check with your local Enrolled Agent (licensed tax specialist). For most people, the tax credit for up to $8,000.00 depending upon purchase price and Adjusted Gross Income (AGI) is a no-brainer. It's all relative though...and it's great to receive something rather than nothing at all.

Janet Foote, EA and owner of AnyThingTaxingYou, LLC ( states,"One key consideration to remember is that you must live in your new home and it must remain your main home for a 36 month period beginning on the purchase date.” Foote adds, “With a few exceptions, not doing so can mean you repay the credit, as additional tax due, in the year the home becomes a rental property, business property or is sold, destroyed or condemned.”

-Job security. Gone are the days where you can get 100% financing on a no-doc loan. Indeed these are challenging times. But everyone needs a place to live. Your decision to purchase should take into account the following factors: 1.) get a financial health check up with your financial planner and/or speak to a mortgage representative to determine pre-approval for a loan. 2.) Make sure you have considered where your budget needs to be and error on the side of conservative in terms of price range. There are plenty of deals out there where more is for less than in the previous market.

-The golden egg has left the nest. Remember when you were hearing how people were flipping houses about three years ago and making a killing? Or your parents or someone you knew bought their homes for pennies and ended up millionaires by selling their homes? Well, those days are gone in terms of buying a home and selling 6 months later to turn a profit. The one positive thing about buying now is that you can invest your money in real estate and make it can only go up from here. The normal rate of return will come into play...on average we are talking about an estimated 7-11 year turnaround for appreciation to reach levels where substantive equity is gained. And once this happens, only draw from equity to enhance the property and add VALUE. No more trips to Ireland on a whim and purchasing expensive luxury SUVs, please.

The buyers are around; they just need the tools, timing and education to make it happen!

For more information on President Obama's Economic Stimulus Package, check out the National Association of Realtors latest news on there website: ( or talk to a Realtor.

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