The Smiths – Luxury Resort Portfolio
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Unfortunately, the real estate market when it finally rebounds does not rebound at the same speed per say as the stock market. It takes many months if not years to regain its strength, because Buyers need to hear constant affirmation that its “safe” to make the investment. Media outlets do not get on the “positive band wagon” until they have weeks and months of positive housing statistics and proof that sales are moving along in an upward trajectory. Even though real estate professionals are reporting home sales and that there are Buyers in the market ready to make the deals at fair market values, all that GREAT NEWS will not get to the Buyers for a few more months. Let me ask you; when was the last time you turned on the evening news and all the reports for that day was happy, positive and optimistic??? According to the Florida Association of Realtors there is a lot of upside to purchasing a home in Florida, the association is expressing at least 20 opportunities and positive indicators on its website.
As a real estate professional the negative commentary makes your job even more difficult, because current Buyers have a heightened sense that the market is quickly declining and the attitude that they hold all the cards and all sellers are at their mercy. I came upon an article published back in May 2007 that directly addresses the issue of how media reports affect a Buyer’s purchasing habits. Please read below.
Fact or fiction: The media decides whether you buy or sell a home.
Sounds ridiculous, even insulting. But many real estate professionals insist there is a psychological component to buying a house – and that a lot of negative publicity about the Florida housing market can have an effect on whether consumers will buy, sell or sit.
Chances are when you are thinking about buying a home, factors such as your credit report, income, debt load, available houses in your market and prices are going to have more of an effect than what you read or hear.
But that’s not to say the broadcast and printed word don’t make some impression.
Stories about a Florida real estate “bubble” and its potential to burst caused consumers to “not do anything,” she says. “And nothing happened. The bubble stories really stopped things for three months,” Renish says. “It was pretty scary.”
When it comes to sales, the biggest factor is “the local economy,” says Dick Gaylord, president-elect of the NAR. “But I can tell you that almost every buyer I talk to today thinks they’re going to get a phenomenal deal.”
Florida mortgage seekers should investigate on their own, especially since neighborhoods and price ranges in various areas of a region, state and town can be vastly different.
Meanwhile, real estate professionals say they would like to see more of the long-range perspective in real estate media coverage.
The real estate market is cyclical, says Ron Phipps, broker for Phipps Realty in Warwick, R.I. “For those of us who have been doing this for a while, this is a normal cycle,” he says of the buyers-market climate. “It’s not particularly bad.”
He worries that the media amplify “minor changes.”
Though talk of a real estate bubble “is great theater,” the 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 though nobody likes to see climbing rates and the bigger Florida mortgage loan 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 [percent], 18 percent,” says Renish..
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 to decline.
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.
And while the media likely has “some psychological aspect” for the buyer and seller, says Fratantoni, “at the end of the day it’s the fundamentals” like affordability, a strong job market and income growth that signal buyers that “it’s a good time to get in,” he says.
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All information is derived from the Palm Beach County Property Appraisers website and the MLS.