Market Assessment....for today

Now that Spring has arrived, we see new activity in the local market. The $8,000 first-time homebuyer credit (anyone who hasn't owned in 3 years also qualifies) and low interest rates have started a flurry of interest in homeownership. With home prices down and the interest rates at all-time lows, this is the perfect time for Buyers.

Homeownership continues to outstrip most other investment opportunities. Historically, the value of homes nationally has increased at a n average rate of between about 5 and 6% a year. If you look back to the 1980's in five year increments, you will see averages around the 25% range + or - 2%. However, in the period between 2000 and 2006 there was an unprecidented increase---not 28%-- not 30% or even 50%, but almost 89%!

An increase of this magnitude should have sent up red flags, but our entire economy was in an unprecidented boom, so we were all happy to believe that this might be a "new norm." Well, it is not and our markets have suffered as we deal with the necessary correction.

Sellers who have owned their homes for awhile will still be in great shape if they want to sell. They just have to remember that what homes sold for in the past few years was an anomaly. It really is only those who bought in the last few years financed at close to 100% of the value or took out interest only loans and have not paid down the principle on their loans who are in dire straights if they need to sell. For these folks it might just be that their home's current value is below what they still owe!---Of course, changes in administration policies take place daily and there may be hope for people caught in this predicament.