I would never expect a buyer or seller to do something I wouldn't do. It is a confusing market right now. It has been a Buyer's Market for some time and prices continue to plummet in most areas. This makes it difficult for buyers to make a decision to buy now or hold out until the real estate market hits bottom.
How do you know when we've reached the bottom?
I've been selling real estate since 1983 and I don't know when that elusive bottom will occur. Some say the 4th quarter of 2008 will show recovery but that's a slow time in the Chicago area real estate market even in a good year. So that doesn't ring true to me.
Many others feel that after the election people will start to feel more comfortable and the market will slowly start its recovery. Yet others say we have not seen the bottom yet and it could take anywhere from 2-5 years for the market to stabilize before it rises again.
Are you ready to take a gamble by waiting?
Interest rates are still low although they keep rising and falling. We might get to that sweet spot where interest rates are low and prices haven't started jumping yet. But when will that occur - or is this it?
Are you willing to take the risk that this might be the best time to buy? Or are you willing to hedge your bets that by waiting today's prices will continue to drop?
Real estate is still seasonal
In many areas our true real estate market is from spring to the end of summer. Most people purchase properties before the school year begins. Less people shop for properties in the winter months, even in some warm weather areas.
We are in our slower time of year besides being in a slow year to begin with. Once the election occurs and the spring season begins in 2009, prices could take a hike upwards. There will be the normal pent-up demand (even in a slow market) and more buyers will be in the market. That causes more properties to sell and those priced correctly might still get multiple offers.
In fact, I recently convinced sellers to reduce price and soon after they had two offers in one day. This was a few weeks ago and it was a higher priced Orland Park home for sale. In fact, one of the potential buyers could not believe there was another offer and they thought it was a ploy to get them to bid higher. They found out the truth when the other buyer got the accepted contract. Because there were two buyers bidding against each other the sellers got very close to asking price. In today's market!
So if you wait until next year, you might have missed out on this winter's low prices. It's certainly a risk.
I will be following my own advice
My husband and I will be purchasing our future retirement condominium in Arizona this winter. We aren't ready to retire yet but I feel once Arizona comes out of its slump prices will increase to the point where it will possibly outpace home prices in our area. So we figured it would be worth investing in a piece of AZ right now while it is more affordable.
We are part of the Baby Boomers and as more of us retire, more interest will be shown to popular retirement areas. I believe Florida will recover sooner than we think because of the baby boomers hitting retirement age. I've read more positive news about Las Vegas, too. The problem with some of these areas is that there was simply too much new building along with the ensuing mortgage mess that created an overflow of inventory with too few buyers. These areas will survive and once again thrive. I can't say when, but I do feel this will happen down the road.
The condo we purchase might not even be the one we decide to retire to (we will actually be snowbirds as I can't leave my kids and grandchildren here in Illinois). I could purchase an investment property closer to home so it would be easier to manage (and less expensive as we would do it ourselves vs. hiring a management company in AZ), but as I mentioned, I feel AZ prices will outpace our local value. Then it will be more difficult for us to afford anything down the road. So I want to make the investment now, while prices are low.
Real estate is long-term
If prices continue to decline I won't care. I am not purchasing a property to flip. I am purchasing a property as a long-term investment. If the condo we purchase this year fits the bill when we're ready to retire we'll keep it. If we don't like it for whatever reason we'll probably sell it and purchase a different one. But at least we'll be in the same value range by selling something in AZ and purchasing something else in the same area.
I'm not a fortune teller
I cannot guarantee that prices won't continue to drop next year or even years to come. I don't know when the market will start increasing again. That's why I'm going to take advantage of today's low prices and take the leap. I'd rather get in now at affordable prices than wait too long and find out that I missed the best opportunity. I'll take the chance that prices might continue to drop. I don't really care as I'll be holding onto this condo for at least 10 years.
Remember, real estate should never be considered a short term investment. Many of the short sale and foreclosed properties were bought to flip and the owners ran out of money and time. That worked for a few savvy investors who got in at the right time. But for the "new flippers" it was already too late for many of them. They jumped on the bandwagon as the market was heading downwards.
So if you're buying to live in the property, now might be the best time to purchase. Give me a call at 708-536-8200 or fill out my Automated Home Finder's Form. If you're not quite ready for that yet feel free to search through the entire active listings of the MLS for Northern Illinois. You can save your searches and continue to search as much as you want.