Pensacola Real Estate

Real Estate Market Update July/August 2007

Finally! A Real Estate Market Update! This is long overdue. Please accept my apologies.

Many of you have heard the reports and are wondering what's going on with the recent much publicized mortgage malady. If so, you are probably wondering how will it effect the Real Estate Market. I've heard from a number of experts in the Mortgage industry and I'll post a letter from one such friend/expert very soon.

My own opinion is quite simple. A glut of mortgages, refinancings, equity lines, etc. were issued during the unbelievably awesome Real Estate market of 2004 and 2005. Homeowners saw an opportunity to cash in on the equity in their homes by refinancing/selling/purchasing at the higher market value, and/or by taking out huge equity lines of credit on their homes. Of course, all of this was fueled by the law of supply and demand. A shortage of homes for sale, coupled with high demand throughout 2004 and much of 2005 caused home prices to skyrocket. As prices increased to an unrealistic level, the tables soon turned, and, by 2006 we began to see inventory increase, sales decrease, interest rates creep up, days on market creep up and prices begin to fall.

2007 has largely followed suit. However, a stabilizing of the market seems to be in effect. We've seen an uptick in sales, a down-tick in available listings and only a slight drop/stabilization in the price of homes. Will this continue?

Back to the mortgage malady. The problem for some who bought/refinanced/took out equity lines in 2005/2006 is that they are not able to sell their homes at a price that will allow existing mortgages and equity lines to be paid off. Adding to the pressure on homeowners, is higher property taxes, higher insurance premiums and increased interest rates that have occurred as variable interest rate loans have reached maturity. Some of these folks have had to face foreclosure. The bottom line, mortgage companies have had to absorb the losses and some have been unable to do so.

How will this effect you the buyer or seller? The news is not all bad. In fact, I think it will have a net positive effect in the long term. In the short term however, buyers tend to be "scared off" by unsettling news. Whether it is news of war (last year saw a tremendous lull during Israel's invasion of Lebanon), terrorist acts, or some other global newsworthy event, buyers are distracted by news. The news in the mortgage industry is sure to cause buyers to pause for a moment before moving forward. So we may see some of the recent market trends encounter a slight bump in the road. However, when the news dies down, and buyers realize that folks are still buying and selling, they will return.

Although lenders have tightened their belts a bit, the average person is still obtain financing at reasonable interest rates. In fact, I've had more buyers this year than I had all of last year. All the while, the fat is being trimmed and we are correcting towards a more healthy market environment.

More good news... Sellers who have the ability to adjust to the changing market are cashing in on this environment. It is still a good time to sell. I closed on a home today which the sellers bought in May of 2004. Back then they paid about $150K for it and they closed on it today for $225K! Now, that's not bad at all! These folks are taking the proceeds and retiring to their farm just outside of Atlanta, GA!

So, is it a good time to buy? You bet. Especially since there are SO MANY homes on the market! By and large, homes are much more reasonably priced than they were even 3 months ago. Even so, in most cases buyers are still able to dictate the terms of the sale, especially on homes that have been on the market for awhile. Many sellers are desperate and MUST SELL! So the patient buyer (depending on the type of financing and assuming the seller is willing to make "seller concessions") may even be able to purchase a home and bring NO MONEY to closing. That happened to one of my buyers (VA 100% financing) at the end of July... they even got their earnest money deposit back!

One big number worth pointing out before I close. The number of available listings continues to decline! At last check there were just over 6800 active listings which is down approximately 200 from last month. That is encouraging. I'll have more on the numbers in my next update, which I hope will not very many days from now. Just after labor day, I'll provide an update on the current market trends.

For now, let your friends know that you know a good trustworthy Realtor who knows how to list and sell in this market, and who'll be glad to assist them in their next Real Estate need!

Tom Robertson
"In Him we live and move and have our being."

posted by Tom @ 6:31 AM