It’s been conventional wisdom for the past few years that we are in a severe buyer’s real estate market. And clearly, this is still the case in many parts of the country-particularly those hardest hit by the crash like Florida and Arizona. But what many don’t realize is that some areas of the country are making a comeback. And if you live in the right neighborhood and work with the right real estate agent, you may be able to get your home sold fairly quickly.
The truth is that home sales are starting to pick up for a number of reasons. First of all, there’s a lot of ‘pent up’ demand that’s been out there for some time now. Despite the down market we’ve had recently, regular human activity is still occurring. And this activity includes moving around, job transfers, moves to be closer to relatives, etc. Even in a down market, these people still need places to live.
So that brings up the question, what have these movers been doing the past few years? The answer is most of them have been sitting on the sidelines and choosing to rent. They have been apprehensive (and understandably so) about jumping back into the real estate market until they’re sure we’ve hit bottom pricewise. Finally, many are starting to believe that we are hitting bottom, prompting them to jump back into the world of home ownership.
Another reason that home sales are picking up in many areas is interest rates. As of Spring 2012, interest rates for 30 years fixed rate mortgages are averaging around 4.25% to 4.5%. 15 and 10 year rates are even lower. These are not teaser rates, these are the real rates that continue for the term of the loan. These interest rates are the lowest since records have been kept, making it much cheaper to finance a home than ever before.
Now with the historically low interest rates and housing prices still at the bottom we are seeing two circumstances that rarely if ever exist at the same time. And many prospective homeowners are just starting to wake up to this reality. They are realizing that there may NEVER be another time in our history when you can get both rock bottom home prices and rock bottom interest rates at the same time.
It’s not just homeowners that are waking up to the buying opportunities out there. Investors are realizing it too. What matters to investors is if they can make a profit renting a property after paying the mortgage. With the price of rent going higher and the cost to finance a property getting lower, many investors are coming off the sidelines and getting into the game as well.
All these factors are likely to create a snowball effect that will drive home prices higher in the coming months and years. And if you’ve been looking to get your home sold for whatever reason, now may be a great time to list it. If you’re in the right area and have the right realtor on your side, you just might be pleasantly surprised at the price you can get.