Archive for April, 2011
With the crash of the U.S. housing market in the late 2000s, many interested observers have watched with great interest to see when the bottom of the market has been reached.
From investors to first time home buyers, the question as to when to buy homes in the current climate is key to making a wise decision. From the mid 1990s through the mid 2000s, the housing market grew at a record pace. It was an easy decision to buy into the market, as properties’ values soared year after year. This housing “bubble” allowed many to accumulate significant equity in their homes, without having to give much thought as to when and where to buy. With the bubble bursting the way it has, driving the housing market down to pricing not seen since the early 2000s (and in some areas, even earlier), it has given many potential buyers reason to pause as they consider the wisdom of putting their capital into such a slow to negative returning investment.
While there is still much concern regarding the volatility of the U.S. housing market, many experts feel that we are at, or near, the floor of pricing for homes in the U.S. Key factors, such as location (the most important consideration in real estate investment), record foreclosure rates allowing for a tremendous number of bank-owned homes which can be purchased for below traditional market pricing, and mortgage interest rates (which remain low) make purchasing in today’s climate an attractive option. However, the possibility remains of prices being driven even lower, in part due to the more stringent criteria being used for mortgage approvals, the continuing struggles of the U.S. economy, and the unemployment rates, which hover in the 9% range. Fewer qualified buyers means a housing market in the US that remains very soft.
A lot of people think that homes are the only things that are foreclosed on, but that’s simply not true. A lot of commercial properties are lost that way, too, because people can no longer pay for them. It may be that they had a commercial property for their business and the business closed, or it could also be that they rented out the building to tenants, and those tenants went out of business. Either way, it can become very difficult to pay for a commercial space if there isn’t any income being generated in it.
It’s frustrating for the person who bought the building, and it’s frustrating for the lender who extended the money for the building. Both will generally lose in a foreclosure situation. The up side to that issue is that it’s a great time for buyers to purchase commercial buildings. If they have the money and/or can get the financing, they can buy properties for a fraction of what they would have needed to pay at the height of the property bubble. Most people thought the pricing bubble only affected houses, but that wasn’t necessarily true. All property went up in value, and the vast majority of it came crashing back down, making it a true buyers market – but only for buyers with good credit and decent down payments.
If you’re looking for a good commercial property, now may be the right time for you to find something great. Check around in your area and see what you can locate, because the odds are good that you’ll be able to negotiate much more now than you would have been able to even a few months ago. The longer a property has been on the market, and/or the closer it is to going into foreclosure, the better chance you’ll have of getting it for a price you’re really happy with.
If you’re trying to buy a home, you have a budget in mind. Most people end up buying at the top end of their budget or even a little bit outside of it, but you don’t have to be one of those people. You can find something that’s inexpensive and really great. When you decide to look at houses, do you set both a top and bottom figure? A range that you want to look in? That’s generally what people do, and it can stop them from seeing some great homes that are actually priced lower than the homes they’ve asked to look at. Don’t assume you can’t find something that costs less and that fits your needs.
Because of the foreclosures and other problems with the housing market, it’s important you remain open to different options. Something that was valued at one hundred thousand dollars two years ago might have a value of sixty thousand dollars today. Your money will go further in this housing market, and you have more buying power. There are two ways to use that. You can buy at the very top of your price range, knowing you’re getting a home that will eventually be worth much more than what you paid, or you can buy at the low end of your price range (or even below it) and get a house that you have to pay substantially less for.
By doing that, you have a lower house payment that you won’t have to struggle to make in a volatile job market, and you also have a chance to free up money to do work on the house. It may take a little bit of time, but you can turn it into just what you want – and all because you didn’t focus on the fact that it seemed to be priced too low for what you wanted.