home prices will continue to remain low

At the Mortgage Bankers Association convention going on in Boston this week, the experts told attendees that the national home prices are going to decline in 2008. Thomas Lund, the executive vice-president at Fannie Mae says that prices will flatten in 2009, before gradually rising in 2010.

Any questions? e-mail me through my website at: www.audreybutlerhomes.com

Watch the naysayers when it comes to real estate

The media is saying that the market is slow, and people should wait. Why? Here's the problem with their theory:

1. How do you know how low it will go? (boy, that sounded like Dr. Seuss!) You will only know when the market picks up, and prices are not declining. How long does it take for this information to get to you in the media? At least a month. They wait for statistics from the NAR, and those reports are created monthly. So let's say you want to buy at a low point. By only looking at the media, you will not get in at the lowest point----you will only hear that the market is picking up, and you have missed it.

2. Instead of going to the second source, why not use the source they use? A qualified realtor. Don't ask just one. Interview three of them. We all have statistics, and can provide actual numbers to help you make your decision.

3. Don't just consider the home prices. Look to the interest rates as well. Even if the prices continued to drop and the interest rate rose, you may not achieve a great bargain waiting. This week, Freddie Mac reported that the interest rate for a 30-year fixed-rate mortgage averaged 6.17%, the first decline since early March. At this time, the rate is low because inflation is low in most areas, except in the area of energy.

4. Have you considered your own timing? How long are you planning on staying in an area? Because the market is going back to normal at this time, you don't want to hold the property a short time. You want to keep it for a while so you can see a good return on your investment.

Should I buy now?

Buyers are looking at houses, and they see that they have been on the market for up to a year. They ask, "if I buy now in a slow market and I want to sell in a few years quickly, am I stuck?"

Short answer: Not likely.

Long answer: There is no doubt that home prices are soft, and there are lower interest rates. Yet people in Orlando need to remember that we are coming off a period of very quick appreciation. In 2005 and the beginning of 2006, due to limited supply, home prices skyrocketed. Prices in Orlando had been low, compared to other areas of the country. Investors flocked to invest and make some great money.

Some of the people who put their properties on the market at the beginning of 2006 did not sell them as expected, and the market took a dramatic slow down from August to December of last year. Some property prices have been overinflated, trying to capitalize on what happened in 2005.

As for a home appreciating, the projected existing home prices are expected to increase in the coming years. The stronger gains will most likely happen in 2008. It won't take off like 2005, but appreciation is likely.

Why is the market sluggish now? Because there are a lot of properties on the market. The real estate market is cyclical, and it does not respond quickly to shifts. Because of the time it takes to build a house and/or a person to decide to sell and list their house, the housing market does not bounce back in a matter of days---it can take months.

With the strong economic factors expected in Orlando due to employment, new business, and the average number of people moving here daily, there is no reason to expect a recession, leading to depreciated property rates next year.

I don't have a crystal ball......

...so I read a lot about the real estate market from experts in the field. The chief economist for the National Association of Realtors, David Lereah, states that existing-home sales are projected at 6.42 million this year, and 6.66 million in 2008, compared with 6.48 million last year. Although some home sales will be reduced by the sub-prime loan restrictions, they should be gradually rising this year and next.

I know I am sounding like a broken record, but this is a good time to buy!