Real estate market misperceptions
The National Association of Realtors, NAR, has posted on their website some misperceptions of the current real estate market that I thought was interesting.
According to 2007 NAR President Pat V. Combs, “Perceptions about real estate have been skewed in recent months due to the overwhelming focus on national figures. While average sales and prices help us identify trends, the fact is all real estate is local – conditions vary greatly from one city to the next. Unfortunately, that news is largely unreported.”
Misperception #1: No one is buying a home, and home prices are falling rapidly.
FACT: According to the National Assocaiation of Realtors, home sales are expected to reach about 5.5 million this year - about the same level of home sales we saw in 2002, which was a record at the time.
FACT: While it’s true that home prices are down slightly from last year, the median home price has increased more the $50,000 since 2002. And, two-thirds of metro areas showed price gains last quarter.
Misperception #2: Foreclosures and delinquencies are rising rapidly in every state.
FACT: According to the Mortgage Bankers Association, four states - California, Nevada, Florida and Arizona - are responsible for most of the increase in foreclosures. A total of 34 states saw a decrease in rates of new foreclosures in the second quarter.
FACT: The reasons for foreclosures vary from state to state, but many lenders have pulled back from the market across the board, forcing buyers io sit on the sidelines.
Misperception #3: Stocks are a better investment that real estate.
FACT: Houses are not like stocks. Homeownership is designed to build wealth over the long term. Studies show that homeowners have an average net worth of $184,000, compared to just $4000 for renters.
FACT: Owning a home also helps strengthen our families and our communities. You can’t put a price on that.
When you consider the facts, it’s easy to see why 5.5 million people are choosing to buy a home this year. There are some challenges in the market, but overall there are many more opportunities in local markets today. Real estate continues to be a solid long-term investment.
Although the above remarks are from the National Association of Realtors, they are, for the most part, right on target. In Naples, we are seeing a bottoming out of prices. Sellers feel that they have reduced, reduced and reduced and they can’t go much further. They realize also that most buyers are coming into the market and offering 5-10% below list price. The investors just need to suck it up, but the ones I feel for are the senior citizens who are in their 80’s and 90’s and just want to sell their condo so they can move back north with their kids. In many cases they have seen a lifetime of appreciation practically disappear. These people aren’t greedy, they just want to move on in their life.
As I hold my hand up to my ear, I can hear a familiar sound….hear come the speculators. The first sign of a recovery.
For more information on the Naples real estate market, contact Ruth Bethem, ABR, CRS, GRI, toll-free at 877-777-7545.