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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.
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.
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!
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