Are You Ready For 2009?
Let’s agree that 2008 was a tough year for most people. Not atypical for an election year, right? The federal government continues to bail out the financial industry, the auto industry and countless other companies.
Now is the time for homeowners, or future homebuyers, to benefit from our current situation. Interest rates are at an all time low, and with the government committing to buy hundreds of millions of dollars worth of mortgage backed securities, some people are speculating that mortgage rates could go as low as 4.25% sometime in January. Another real estate incentive is the first time buyer tax credit (loan). Or, if you’re one of the unfortunate ones looking at a short sale, the government is at least now giving you the difference tax free. Low vacancy rates and high foreclosure rates make for a great rental market for you Investors out there.
Are we at the bottom of this market? The only thing that we have to go by is history, and history tells us that when there is correction in the market, the bottom lasts 12-18 months. Experts say that we’re now into our 13 month down. The time to get in the market is now for the following three reasons:
1. We have a quality inventory to choose from with the least amount of buyer competition.
2. If, you can afford to hold your new real estate purchase for long enough to see the gains (3-5 years), then you will realize a good profit.
3. Lastly, if you miss-time the bottom, the only way you know that is when it is too late!
Written by Perry & Co Real Estate Agent Brad Colburn
Filed under: Denver Colorado Real Estate, Market Conditions, Perry & Co. Agents | 2 Comments
Tags: Brad Colburn, Denver, Denver Colorado Real Estate, Perry & Co
It seems that there are quite a lot of sellers that have been waiting for the denver real estate market to turn around before putting their home on the market. What is your take on how the market will react to an influx of properties if the market turns?
My personal take on an influx of properties hitting the market as soon as things turn around depends on your definition of ‘when the market has turned around’, do you define that as prices going back up, time on market decreasing, or a 3 month absorption rate? I think the days on market is a good sign of when things will start to turn around as well as absorption rate. A healthy real estate market is a 3 month absorption rate, anything longer than that is a buyers market and anything shorter than that is a sellers market.
I think that as the market begins to look better, we will definitely see inventory increase, however, I think that the price correction that we have witnessed the last couple of years ate up too much equity for a lot of people, especially those that purchased their home in the last 5 years or so.
I also think that interest rates play a huge role in how quickly the market will recover. If they continue to hover around the 5-6% range, we will recover quicker than if they were higher. I also think that as Denver continues to add more jobs, our market will recover quicker than the rest of the nation.
As always, good homes that are priced right will sell. The question is, do you have the equity to sell and accomplish your real estate objectives?
Perry & Co.