Market Conditions
Real estate sales hit and all time high in 2005, everything was favorable for sellers: High prices at closings, high percentages paid in relation to the asking prices, and a large volume of transactions defined an extreme seller's market. But that all ended during the first quarter of 2006; There was a rise in mortgage rates, tax assessment reevaluations were put into effect for many areas in the spring, and continued reports of a slowing economy and a "bottoming-out" of real estate sales in the media all contributed to a market softening. How? Well, we lose Buyers and Buyer interest when mortgage rates rise and when the media exaggerates poor market conditions. And, although interest rates are still extremely low historically speaking, lower range buyers lost a bit buying power when rates rose. Rates declined a bit and inflation steadied, but purchasing activity only just began to recover.

Additionally, with new higher tax assessments, many of the people that felt their new taxes will be too high, put their homes on the market…forcing a steeper increase in inventory than would be necessary. The laws of supply and demand, then, promise values will drop. Sad, but, true…and they did. Some areas even suffered further at the hands of their own neighbors… one town voted on whether or not property taxes could be increased to help the school system and the majority that voted chose lower taxes instead of bettering the towns best asset. So, now townspeople are saving a few hundred dollars on the property taxes, but, their property values have decreased by the tens of thousands in some cases

So, with high supply and a decrease in demand for certain market price ranges, days on market, and asking price-to-sale price margins have increased. Inventory in many sought-after communities rose by about 25% and as much as 50% in other areas. The sales prices have adjusted. Sellers now compete for Buyers and Buyers have become more choosy picking through the better inventory. Buyers now continue to pay lower percentages of asking prices.

Is There Really a Bubble to be Burst?
No signs of a bubble bursting on a national level. Keep in mind that the "Real Estate Market" is very segregated, just like the stock market, keeping an eye on local markets may prove national predictions wrong. There is no disputing a decline in overall prices, sales volume, margins and percentages, as well as increased days on market for many areas. However, inventory has fluctuated by 10's of percentages in some areas, gone up for the first two quarters of 2006 and began decreasing significantly by the last quarter of the year…So, time will tell as to whether or not prices will continue to decline or finally level off. Yes, in some areas, especially the south and those areas that attract retirees, and, of course the areas where short-sited politics has adversely affected property values….Yes, Yes, values have declined so drastically one can almost hear the "popping" sound. But not everywhere, and certainly not in all parts of New England.

Advice to Buyers
Buyers need to investigate all options that will help them retain a positive cash-flow and to appropriate saved dollars efficiently throughout the purchase process. Read through our Mortgage Originator Section of this web-site in order to help you decide on what type of mortgage originator you would prefer to contact. Then, choose an originator you feel comfortable with, and get pre-qualified. Request a pre-qualification or pre-approval letter for your file so that you can prove yourself to be a viable Buyer quickly; you gain negotiating leverage this way. Remember, you can continue to shop around for a mortgage, but you need to start somewhere. Contact your real estate agent and give them the information on the type of home you are interested in and the price-range you need to be in, etc. Be sure that you will be kept abreast of changes and additions to the market. Remember, also, to use NEProperties.com to access listings or use your states MLS-linked listing web-site to access all of what is available online. It is okay to look a bit above your comfort-zone, you may happen upon your over-priced dream home having Sellers that are willing to significantly negotiate. You never know. Do your research and make sure that you know what similar houses in the area have sold for RECENTLY, like within the last 3 to 5 months, before you place an offer on a home. You do not want to offer too much or too little. Compare and contrast all you have seen, but, know that you may find the house that is right for you very quickly, or it may take a lot of looking to finally find the right one…but YOU WILL KNOW WHEN YOU WALK THROUGH THE DOOR!

Once you sign a contract, remember to have as many of the inspections that matter to you during your contractual period. Many issues like termites and radon are remedied or paid for by the Seller. However, it may be a good idea to have a structural mechanical inspection first, and then order Radon and lead, etc later as these inspections cost $100 and $200 respectively to be completed by professionals. So, if you know there are structural issues that you do not want to contend with, then you are not wasting the money on the extras right away. BUT, remain aware of your Inspection Contingency Date, so that you are always in compliance with your contractual obligations. Of course, that goes for all of your contingency dates…right them in your day planner and file with the Seller all required items prior to your dates so you do not risk losing your deposit.

The key to managing your out-of-pocket expenses is, SHOP AROUND…for mortgage, homeowners insurance, etc. And, one last bit of information, unless you are downsizing to retire, you probably will move again within the next 5 to 10 years, so budget accordingly both with your savings and with your mortgage program, rate, and payment. Inquire about Adjustable Rate Mortgages, Interest only, and Reversible to see if any of these money saving products might be a good fit for you. So, if you find a house that suits you now, but, that you cannot see yourself in forever, just plan ahead and conserve your resources, e.g. don't get a 30-year fixed loan putting 20 percent down, unless there are no other loans available that would save you a couple hundred dollars or more, per month on your mortgage payment. Compare interest rates for your financial investment, and neighborhoods for your lifestyle investment. Base your decisions on you want and need right now, not ten years from now.

Taking all of these precautions will help you be realistic and content in your new home and with the process of purchasing your home. And, remember, it is the biggest change and investment you are going to make over the next few years. At New England Properties, we want to ensure that you are happy once you have signed on the dotted lines and eventually arrive at your new home!