Media coverage can dampen real estate market
This is one reason it pays to
investigate on your own. Especially since neighborhoods
and price ranges in various areas of a region,
state and town can be vastly different.
Also, talk with a couple of pros
in your area. "You might find out that
the market is better than you were led to believe
in the press," says David Ledebuhr, regional
vice president for the National Association
Real estate professionals would like to see
more of the long-range perspective in real estate
The real estate market is cyclical,
says Ron Phipps, broker for Phipps Realty in
Warwick, R.I. "For those of us who've been
doing this for a while, this is a normal cycle,"
he says of the current buyer's market climate.
"It's not particularly bad."
He worries that the media "amplifies
minor changes," he says. "The media
is like the wind: It creates white caps, it
creates a lot of excitement -- which can cause
people to be overwhelmed."
While talk of a real estate bubble "is great theater," the hard fact is that most people buy a home to have a place to live, Phipps says. The price will differ according to what a buyer can afford, but that basic need is always there.
Real estate professionals have also seen a wide range of interest rates in the past two or three decades. And while nobody likes to see climbing rates and the bigger mortgage payments that result, some agents remember when rates for a typical home were in the teens. And, they also remember that lower home prices added some balance to the equation.
"I sold houses when the rates were 16, 18 percent," says Renish.
"And I bought my first house at 9 percent," she recalls.
What part does the economy play?
From a practical standpoint, many
of the areas of the country that are seeing
depressed growth or declining prices can link
it to one or more of several factors: a shrinking
jobs market or faltering local economy (including
a higher number of foreclosures); overbuilding;
or speculators who bought to make income or
quick profit and dumped the properties when
interest rates started to rise or prices started
Mike Fratantoni, senior economist
with the Mortgage Bankers Association, agrees
that jobs are the No. 1 factor when it comes
to the health of the home market. "Absolutely,
the job market is most important," Fratantoni
says. "And we think that the Fed's successive
rate increases have not quite worked their way
through the economy yet. We do anticipate that
as these work into the economy, we will see
some slight increase in unemployment,"
likely by the middle of 2007.