WHAT DO THE EXPERTS KNOW???

There are articles that abound on the net and in magazines about our real estate market and whether or not we will be going into a more stabilized market leading to a rebound in sales or a double-dip recession?  The experts can look at all the statistics and do their number crunching and analysis and make their predictions about current & future trends of the market; and some will be correct and many will be wrong.  With the lowest interest rates in 50 years, you would figure this would drive the market! Previously, however, if you were not in contract by April 30, 2010, the $8000 tax credit incentive for purchasers of primary residences was taken off the table as of April 30, 2010 (but the government passed the extension for closing til Sept. 30, 2010).  That factor alone had pushed more people to buy, especially in April and sales did increase dramatically and it kind of spoiled us and made the months stats much better and improved year over year.  Just like the discounts for “cash for your clunkers” in 2009, which drove the sales of vehicles higher, it was fantastic for the current economy at that time but had a negative affect of reducing sales for future months after the incentives had expired.  For the NorthEast, Mays Stats were -18.3% lower from Aprils Stats, but 12.7% higher year over year, the south was 0.5% higher and 22.9% higher year over year, Midwest stayed the same comparing April to May, but 22% higher year over year, the west, 4.9% increase May over April and 15.2% higher year over year and the overall stats for the U.S., down -2.2% comparing from April to the end of May but 19.2% higher year over year, according to a report by N.A.R., (the National Association of Realtors).  2009 was so poor due to the banking crisis at the end of 2008, that I believe 2010 had to be better.  Let’s face the facts, people have to have real money and credit to purchase.  Psychologically, people are not feeling as confident; we are all not going out and spending like we did; the faucet of conspicuous spending has very much slowed down;  the mortgage/bank crisis has cost many their jobs, directly and indirectly, so if you have lost your job, had your salary or wages reduced, new to the job market or have a job that does not pay enough to buy a home and previously lost money in the stock market, you are sitting back waiting and watching.  Also, the fact that U.S.  companies have outsourced a tremendous amount of manufacturing jobs overseas over the last 10 years, has caused a shift between the haves and have-nots!  The buying power of the middle class has been eroding over the years and current economic conditions during the past few years has caused most to re-evaluate their financial positions, cutting back on discretionary spending.  As they say, “The Rich get Richer and the Poor are getting Poorer” but even that slogan has changed.  Many of the homes of the rich are being foreclosed on or are modifying their morgages.  Many people who are “under water”  (their mortgages are more than the current market value of their homes) but can afford to pay their monthly mortgage are just walking away from them in much higher numbers.  Many banks will be forced to go after those that have the assets and liquidity to pay.  This type of exodus is proof of the poor psychology and mindset of the market.

If may take much longer for us to get out under the load of foreclosures, maybe 3-6 years or longer.  But, if we haven’t learned our mistakes, we never will.

Human nature will continue to not look back, but just forget and repeat our errors and greedy ways.  Some will learn, most will not unless balanced and fair regulations are put in place concerning borrowing.

Bottom line, if you cannot afford the loan, you should not be allowed to take it.  Owning a home is not a right, it is an earned responsibility with obligations and ramifications!

On a lighter note, however, for those who can, it is a fantastic time to Buy!!!!