Real Estate cycles and a shifting market

In these uncertain times, many pundits and talking heads are reporting the news and acting as if this was the end of the world as we know it- but that just isn’t true. We most certainly are in a shifting market, which threw a lot of us off guard. A few years ago, we never would have imagined the situation we are in today, when homes were selling in record times with many multiple offer scenarios. Or when the consumer confidence rating was at a record 99.5% last September as compared to 59.8% this year. Those glory days are gone and we are facing a new beast.(http://money.cnn.com/2008/09/30/news/economy/consumer_confidence/index.htm).

This shifting market seems foreign to us, seeing as we just went through some pretty great times. But this shift is nothing we haven’t been through before. SHIFT, the most recent book by Gary Keller of Keller Williams Realty International, begins with the following paragraph: “The real estate market has shifted drastically and dramatically. Sales volume and the number of transactions have dropped significantly. Inventory has reached an all-time high. Buyers have never been more reluctant. Fear is rampant, anxiety is high, and people are getting out of the business left and right. Sounds familiar? Sure it does. The year was 1979!” Does it make us feel better to know that this has happened before? What did we learn from it in 1979? Fast forward to 1987 and it happened again. Changing tax laws this time had a disastrous affect again. Well guess what? History repeats itself. Now we are faced with this again, in 2008 but this time there are real differences. In 1979 mortgage interest rates topped 18 percent. Last week buyers were still getting approved at under 6 percent through local lenders. That is a huge difference! Today’s sellers, with the help of their real estate agents, are becoming realistic with today’s pricing, bringing our market back on track. The real estate business is “cyclical.” An experienced real estate agent and a mortgage broker will understand this and be prepared to give counsel that is in tune with the current market. Remember though, the news you heard last week is “old news,” so stay in touch with your local, trusted real estate agent for updates on this ever changing market.
Real estate remains your single most valuable asset if handled correctly.