A Look Ahead....
Rarely has it been so difficult to glance forward into the real estate crystal ball as it is today. There are enormous challenges ahead both statistically and psychologically if the market is to improve. Famed motivational guru Tony Robbins was on the Today Show last week and predicted that every generation has it's defining moment of challenge and that this was ours. So be it. If you are involved with real estate in any way, here are a collection of thoughts on where we may be heading....

Supply of homes
This issue isn't going away anytime soon. Nationally and locally about 1 in 3 homes sold is a bank owned property with that percentage going up from about 23% in 2007. Think about it. 1 IN 3. Bank owned homes are overly competitive with normal resales, they wreak havoc on existing values by dragging down comp sale info and are still rising in their numbers. This may change in 2009 but not this year. In addition there are still plenty of resales that are non bank owned that must be absorbed by the market for the supply - demand line to improve.

Interest Rates
Conventional rates have gone from 5.8% in February of '08 to 6.75% as I write this on 7/26/08. Forget what the Fed will do because the market has already done it. Rates are up, will probably inch higher and will be a long term negative on the market. The only way to defeat this would be to buy yesterday. The other side of this is that rates are now dependant on an applicant's credit score. Perfect score and you may end up at 6.75%. Have a ding or two and you may end up at 7.5% for the same loan. Again, another readjustment in the market that will provide a challenge.

National Economy - What it all means
We may not be in an overall recession but it certainly feels that way. Many would argue we are certainly in a housing recession/depression as it sits today. This is not going to be a short term dip. This retreat in the housing market has all of the potential of being a 2-3 year problem to resolve and in some micro economic markets and price points, it may run much deeper than that. Still, what it means is that now more than ever consumers MUST make good investment decisions regarding real estate. Those that do will recognize significant appreciation and value growth over the next few years. This is not like the good old days when all you had to do was buy anything when the market was at the bottom of the cycle. You still must make good decisions regarding a purchase and if you do you'll reap the rewards. If you choose poorly you may simply be acquiring a static investment that you'll end up being the caretaker of over the next few years rather than one who reaps it's benefits.

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