Good News in Real Estate for 2008

Bombarded of late by stories of gloom and doom on the real estate front, I thought I would share a few words of encouragement as we head into 2008.

Laurence Yun, the chief economist for the National Association of Realtors, recently reiterated that nationally, 2007 was the fifth best year ever on record. Home prices declined about 1.5 percent after a 50 percent run up in prices.
Bottom line: 2008 represents the best window that buyers will have to find excellent deals with excellent financing. Get the word out there.
Here are a few other key pieces of positive news from Yun's recent economic report compiled by Bernice Ross in her article “Positive News for Realtors in '08: NAR economist underlines real estate's silver lining.”

1. New housing starts: Even though these are dropping, there was too much building in recent years. The market is simply adjusting to normal supply-and-demand pressures. The inventory is "being controlled which makes stabilization occur more quickly."

2. Foreclosures: According to Yun, the 41 percent increase in foreclosures has resulted primarily from investor-heavy real estate purchases in Arizona, California, Florida and Nevada. The majority of these individuals are flippers whose investments did not payoff. More importantly, the number of foreclosures in Utah, New Mexico, North Carolina and South Carolina is actually declining.

3. Under-priced markets and superstar cities: Although the coastal markets are still overpriced, Middle America is under priced. Nevertheless, Yun cites a new trend termed, "superstar" cities. These cities will command premium prices, regardless of what the market does. There is so much wealth concentrated in these areas, that measurements are simply not predictive. In addition to London, Paris, Tokyo and New York, Yun also identified San Francisco, Miami and Seattle as potential new superstar cities.

4. The recovery has started: Other than the three states hit heavily by job losses in the automotive industry (Indiana, Michigan and Ohio), the states that first experienced a downturn in the Northeast, are now in recovery. Specifically, Connecticut, Massachusetts, New York and Rhode Island were the first to feel the slump and are now well into a recovery. Furthermore, there appears to be a pent-up demand for first-time buyer properties due to a large number of Gen Ys (born 1977 to 1994) that are now buying their first homes. Falling interest rates will motivate many of these buyers to step into the market now.

5. New jobs and corporate profits are still strong: Corporate profits are still strong with companies as diverse as Microsoft and Jack Daniels reporting close to record profits. Furthermore, the economy has generated 4 million net new jobs and wages are rising.

6. A weak dollar may harbinger more foreign investment in U.S. real estate: Although the decline of the U.S. dollar will end up costing us more when we go overseas or purchase imports, it has resulted in more manufacturing jobs returning to the U.S. It also may mean more foreign investment in U.S. properties as well. Just a few years ago, the Canadian dollar was only worth 70 cents in U.S. currency. Today, the Canadian dollar has been hovering at about $1.05 to $1.10 U.S. What this means is that we can expect more Canadians and Europeans to be purchasing U.S. property, because our prices are approximately 50 percent cheaper than they were just three years ago.

7. Real estate: Still the best shelter: For those agents who represent reluctant first-time buyers, Yun points to some interesting research from the Federal Reserve. Between 1995 and 2004, the average renter accumulated $4,000 in wealth. In contrast, the average homeowner accumulated $184,400. Furthermore, the typical homeowner holds their property for six years. Within this period of time, NAR's research shows that approximately 97 percent of the homeowners will have a positive equity position after that period of time.

Getting your home ready to put on the market.

So, it is the first of the year and you have decided that this year is the year that you would buy a new home. Wonderful, but first you have to sell your present home. You knew that this day would come and you have planned for it. You have planned to remodel the kitchen and the baths. You planned to replace the carpet. You planned to redo the landscaping in the front yard. You also planned to clean out all of the extra stuff in the closets and in the basement. And now you want to catch the spring market. Wonderful, you now have two months to do everything you planned.

Don’t worry, it might not be as bad as you thought. Ok, so maybe you don’t have time to take the whole kitchen apart and put it back together again, but you might not have to.

Small things can make a huge difference. Clean the cupboards out, clear off the counters. Maybe things just need a fresh coat of paint or furniture polish. Tighten up handles and make things shine. Don’t replace counter tops or flooring unless they are falling apart or curling up. The thing to remember is that clean and good repair is important. It doesn’t have to all be new or updated. Home Buyers want to know that the house has been taken care of.

Clean out closets. Clean closets show buyers just how functional and how much they can really get in them. And besides, you will get wonder complements for how neat they are.

Washing and polishing woodwork will really brighten things up and little marks won’t be so noticeable.

Wash curtains, blinds and windows and clean out the sills. Don’t replace carpet that just needs a good cleaning.

A basement in an older home can look cleaner and well maintained by painting the walls and the floor. Some things can be a lot of work, but it will pay off. Don’t store everything you just took out of upstairs in your freshly cleaned basement. Rent a storage unit. It is a good place too to put the furniture that is making a room look smaller than it is.

Don’t take down all of your personal items. Why would you bake cookies or a pie to make you home smell like home, if you don’t want people to see that people really do live there? Do put valuable things away or out of reach. A crystal vase shouldn’t be sitting where someone could bump it over. A valuable coin collection should not just be sitting out.

Don’t forget about your front door. If they don’t think it looks good from the street, they won’t want to come inside. Touch up any pealing paint. Put out a new welcome mat. The art of “Feng Shui” suggests red flowers by the front door.

A home inspection before you put your home on the market may be helpful. But remember they might find something big that needs to be taken care of. But wouldn’t it be better to find it when you have time to decide how to take care of it.

When the time comes for you to pack up your things, it will be easier. You have just organized your house, gotten rid of things you don’t need. Now you can move to your new home.

I always tell my sellers neat, tidy, and good working order sells just as fast as new. If you have a question about what repairs or replacement works best in your market, contact your realtor.

Happy Moving!