Last Sunday, Sarah Cox wrote a post entitled “Around The Property“, and she followed it up this week with a piece entitled “Looking Back, Looking Ahead”. While the article is supposed to be about what buyers should expect in 2010, it probably should also be titled “False Hope”.
Reflecting on the past year, broker Mary Wright of NRV Gateway Realty, Sales Director Diana Blair of RE/Max 8, and Brandon Nicely of Alcova Mortgage shared their thoughts about real estate in 2009. Blair noted that in both September of 2008 and 2009, the average price per square foot of homes on the market was the same – $116 – indicating, to her, that sales prices held steady.
“Over a 15-month period, the percentage change was .8 percent or .008, which is good … we made it through the worse economic setback since the Depression with a slight change since the Depression with a slight change in price per square foot pricing. The percent change for the last 12 months is up 4.5 percent.”
Wright reflected back to December 2005, pointing out that was when NRV Gateway first opened its doors.
“Business was brisk for us all back then. Now, our national has weather a recession that has lasted over 18 months.”
But she hastened to add that the New River Valley has been somewhat insulated from economic downturns in the past, although every family in the area has been affected in some manner this time around.
“It has been difficult for sellers and agents alike. Home values have declined and buyers still expect discounts,” she said. It is a tough pill to swallow when buyers who bought at the top of the market now are discovering the pressure of dropping home values.”
“But”, said Wright, “this is a cyclical business, and this, too, will pass. I think the events of this last year have been character building, and I’m hoping familiers will emerge strong[sic] than ever, with better savings strategies, and more supportive of each other.”
Nicely said 2009 will be “the year to remember” for anyone involved in real estate. The government kept interest rates low, helping millions to refinance, although the new HVCC (Home Valuation Code of Conduct, which went into effect May 2009) appraisal process caused hurdles.
Nicely said the new code caused some appraisals to come in lower than expected, leaving some homeowners unable to refinance. Then, more than 150 banks failed, causing underwriting guidelines to change.
On the positive side, the First Time Homebuyer Credit of $8,000, together with low rates, helped keep the mortgage industry alive in a “very tough economy,” he said.
While 2009 was a year of transition, said Nicely, he forecasts 2010 as the year of moving forward.
“We have seen most lending practices put in place, and now everyone can start to adapt to them,” he said.
This adaptation takes in account, he pointed out, that three years ago it was 360 degrees different. He also said the homebuyers credit – which has been extended to April 2010 – will keep homebuyers signing contracts.
“The government has informed everyone they will not continue to buy mortgage-backed securities throughout 2010, like they did in 2009, so everyone should be prepared to see rates rise a half-point through June 2010 and another half-point by December 2010.”
Wright is more cautious about the first half of 2010, saying she’s been hearing that the first six months will be tough and the last half better.
“Sarah Bohn of Northwestern Mutual presented a graph showing economical milestones since the Great Depression,” she said.
Wright continued, adding that some of those “troughs” were deep and wide, covering years during the Depression.
“What really caught my eye tough[sic] was the sharp upswing immediately following those tough economic periods that seemed to soar even higher than the downturn. This was repeated time after time throughout history. I’m optimistic we will see history repeat itself.”
Nicely repeated the mantra that seems to be going around: “There will be no better time to buy in history between now and April.”
Why? He pointed out that rates are at an historic low, government is “handing out cash for signing a contract,” and prices are at their lowest levels in years.
Wright recalled “Shift,” a book by Gary Keller that recommends sellers trade up in a down market.
In Keller’s book, he writes, “There is only one certainty in the real estate business – that it is cyclical, and what goes up must come down. ‘Shift’ teaches agents the foundational tactics that jump-start your business in tough times, and power it forward in good times. ‘Shift’ is not about teaching agents how to have a good week or year; it is about showing them how to have a great career.
From last week –
I appreciate enthusiasm, and while real estate in the New River Valley isn’t falling through the floor it’s not going gang busters, either. I will continue to say that my enthusiasm in 2010 will be tempered. Home buyers and sellers in the New River Valley need to pay attention to unemployment in our area – many areas of the greater NRV are really struggling, despite having unemployment rates lower than the national average. Unemployment is going to be a huge component of where the New River Valley real estate market heads in the foreseeable future.
None of us have a crystal ball, but we have access to the same data, and the data shows that things aren’t exactly as reported. Based on what’s available, 2010 will see continued opportunities for buyers and sellers as prices and interest rates move more towards center … plain and simple. I disagree with Brandon in his assessment that there’s no better time in history to buy a home than right now. While it’s true that mortgage rates are lower than they’ve ever been, home buyers should still be paying attention to falling prices and bringing money to the table.
And consumers don’t care what Gary Keller has to say to agents, do they?