What's Going On?

You may be wondering what is REALLY happening with the Real Estate market. The fact is we are in a correction period much like the stock market exhibits. If you recall we had a very rapid rise in prices over a very short period of time (some refer to this as the bubble) . This combined with historically low interest rates and very loose restrictions on who could obtain a mortgage sent the real estate market into a tailspin.

Much of this frenzy was created by people who wanted to "move up" to that next house. The interest rates on the interest only loans were so low that you could purchase a much more expensive home for about the same mortgage payment on the less expensive home. The supply and demand rules kicked in and prices went up very rapidly to the tune of 10 - 50% in some areas of the country. Normally appreciation is 3-5% per year so you can see where the increases are out of typical range. With this rapid rise in prices it had to stop at some point but few people expected the screeching halt.

Why did this happen? After much research and personal conversations with some experts it is our opinion that people went after more than they could handle without carefully looking at the mortgages they were signing on for. An interest only loan at 1.5% would rise to over 4% within a relatively short period of time . For those who had a $200,000 or $300,000 loan you can imagine the huge jump in mortgage payment. This is what has led to the high rate of foreclosures and short sales which has caused a glut of homes on the market and lower prices.

With that all being said - step back and look at the big picture. If prices rose 15% over that period of time and now they are down 13% people that purchased in 2005 are most likely still ahead in their house values. Some areas of the country are up down a little less or a little more (GA is about 9%) but it will level out. We feel the bottom is just about here and we are definitely seeing the inventory starting to clear out and prices beginning to stabilize. We are EXTREMELY positive about the Real Estate market and encourage anyone thinking of buying to do so. There truly has NEVER been a better time to buy. There is great inventory, great pricing and low interest rates - we have not had all of these motiviating factors at one time in the past.

If your have questions or concerns please feel free to post them here or Talk To Carol!
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