Real Estate Softens

That was the headline of The Daily Sentinel, one of our local newspapers on Sunday. The first question just about everyone asked me the next couple of days was "Did you see the article in the paper on Sunday?" and that question was followed by "So what is your take?" My response was and still is - "Home sales are down, but homes are still appreciating and earning equity. We've had a couple of remarkable years (one year homes appreciated over 20%), but there was a need for a correction." I would then explain that young people just starting out were starting to have trouble finding a starter home they could afford. If you look at the graphs in some of my previous posts you will see there aren't a lot of homes priced under $200,000.

You can read the article here - The Daily Sentinel article


Some of the key points from the article:

• Residential & Commercial real estate is down 28%
• Decline is due to higher lending standards
• Inventory is up
• New construction is down 50% (The higher lending standards are, also, affecting the builders and their construction loans. Some builders are unable to build more than one house at a time.)
• Poor weather contributed to the decline (We had a long, cold winter)
• Median house price is $229,000 (down 0.4%)
• House values are up 3.7% in the past 12 months
• Residential home sales will increase, indicated by an upward trend for the month of June
• This just means that we are undergoing a transition from a record-breaking market to a
  “normal” market.

What is a “Normal” Market?

Well in a "normal" market -
It takes years to build equity in a home, not months. Buyers have to have a good credit score in order to qualify for a mortgage. The lending practices have definitely tightened.

I think it is important to remember that things have slowed down, but our homes are still earning equity. Also, it is getting increasingly difficult to find a place to rent, especially for a family. Therefore the individuals and families, that are either continuing to have trouble finding a place to rent or are improving their credit, will soon be deciding to buy a home.