Today’s Real Estate Market Pros and Cons

Today’s current real estate market can be quite challenging to maneuver.  Not only are we dealing with foreclosures and short sales, but a recession, frozen credit lines and uncertainty of the economy as a whole.  But to any situation, there are 2 sides: a pro and a con which we will go over.

Pro – Very Low Mortgage Rates

It seem surprising that even now, rates are continuing to stay at historical lows and for many borrowers with good credit, a mortgage can now be much more affordable at hundreds less a month, savings tens of thousands from the life of the mortgage.

Con – Frozen Credit Lines

Banks are no longer lending freely.  Even though they received quite a bit of money from the bank bailouts, they are holding on to much of the cash.  Many are looking for reasons not to lend.  Although, placing better restrictions on the lending process is still a good idea, some lenders are waiting for real estate prices to bottom out so that they do not end up in a situation where most of their assets/collateral are worth much less tomorrow.   Many are asking for more of a downpayment to cover this vulnerability.  You may also need to be prepared to pay an extra point when obtaining your new property.

Pro: Finally, some good housing deals!!

Real estate prices have fallen dramatically over the past 2 to 3 years.  Prices have flatten to property values equal to 2003 in some areas.  The real estate market is still falling down and there has been no appreciation for these past few years.  Thus, many desperate sellers and bank owned foreclosures are willing to sell for a lot less.

Con: Watch what you are purchasing!!

Values are “great” in many areas, but you still need to be watchful of what you are buying at an amazing deal.  Many problems can be found when purchasing a short sale or foreclosure.  Check out projects that are incomplete, a ruined carpet, missing appliances, and much more.

Pro: Plenty of time to check out the growing inventory of homes!

There are many homes to search through on the MLS sitting for many months (and some for over a year).  Shopping around for the perfect home is quite nice in this market to ensure you get the most home for your money.  Take your time and check out all the homes.  In most cases, you’ve got time.

Con: What if the real estate housing bottom is still far away?

Lenders or banks are looking for when the housing market will “bottom” out before lending more freely again.  The residential market appears to be correcting itself a bit.  The economy overall has everyone’s attention – who knows how long it will take to strengthen consumer confidence again but for sure, when things start to “recover” overall…housing will be climbing in price again.