Why Those Negative Stories
In The News Won't Affect You

The news media over the past year has run a lot of stories over the past year related to real estate. Many have dealt with legitimate concerns, but the public has to keep in mind that the media tries to be dramatic to sell papers or increase ratings.

Why You Shouldn't Worry If You Are A Buyer

The big concern for buyers is the stories about the mortgage crisis, and the increase in defaults and foreclosures resulting from the crisis. There are homeowners out there that are being hurt by current problems in the mortgage industry, but anyone buying now is very unlikely to suffer the same consequences.

The current problems are a bi-product of the housing boom in the first five years of the decade. Many people that had been in a position to buy were priced out of the housing market. In order to deal with this glitch in a booming market, lenders used a lot of creative financing techniques to get these people into new homes. In some cases, buyers made little or no downpayment on the property, or have a loan that requires little or no payment towards the principal balance of the loan. This meant that when home values started levelling off, they did not have a lot of equity in the property, making it more difficult to pay off a loan when the property sells. Other borrowers got loans with adjustable interest rates, which made the home more affordable at first, but pushed payments too high to handle when the rates adjusted.

The important thing for buyers to remember now, is that THEY ARE NOT MAKING THOSE LOANS ANYMORE! Borrowers are no longer being allowed to live beyond their means. If you get a loan, it will be one that you can afford to pay back.

Buyers are also concerned that if they purchase a home, it may lose value and they should wait until prices are on the rise. In most neighborhoods in the region, PRICES ARE ON THE RISE NOW! Any home prices that were over-inflated have already adjusted, and a buyer counting on getting a better deal by waiting is missing out on a great opportunity. Plus interest rates are very low right now, and buyers need to realize that their monthly payment is just as important as the sale price. If someone waits and rates go up, they are paying more for the same property.

Why You Shouldn't Worry If You Are A Seller

Depending on the neighborhood, if you bought your home in the last couple of years, it is possible that you may have a hard time getting your money back on the sale of that property. If you've been you're home longer, you are probably making a profit. The news media did a great job of building up expectations this decade (again, that was the dramatic story that was selling), so it's natural to be a little disappointed if you're not making as much as you thought you were. What a seller needs to remember, however, is that if a property has gone up 150% in value, and drops 5%, that seller is still making a lot of money!