5 Reasons why Bad News for real estate buyers is Good News!! (continued from yesterday)

March 27, 2008

For those who read yesterday’s Blog, about real estate pricing in the metro Phoenix, Tempe, Scottsdale area when I took a leap of faith of faith (or as some have suggested, forgotten how to read) when I was either bold or crazy enough to suggest that the S&P/Case-Schiller Report that announced home prices have plunged more than 10.7% as “Good News”!!

I am not retracting my belief just qualifying it as an assessment that the news was a case of the Glass Half-Full v. Half Empty. Here’s why ….

1) It’s a Buyer’s market – for the Half of every real estate transaction, the Buyer, opportunities are created for those who have the conviction to step in when value in home prices is in their sights and the patience for long-term growth which historically real estate has given

2) Lenders easing credit – the lower prices, offer less risk for lenders. Let’s face it, values are not going to $zero. Lower purchase prices, lower loan amounts, lower payments for borrowers, more upside in appreciation, than downside

3) Lower interest rates – how you finance a home, is often times more significant than what price you pay, 30-year fixed rates are hovering near all-time lows. You can lock in a fixed payment with a reduced price and reduced rates than seen in many many years, thus lower monthly payments for the same house 3-4 years ago.

4) Reduction in inventory – we need to get past these inventory levels and reduce the glut of homes on the market. Not until then, can home prices rise again. This will happen. However, not until prices are lower. This negative price drop is a positive for reduction in inventory. The statistics show we are clearly moving in this direction.

5) Consumer confidence - every day , at least in Metro Phoenix , we see negative news. Negative news, is negative water cooler talk. Misery loves company, etc… you fill in the cliché’ . With lower prices, we will see more sales , more happy buyers who feel they got that “Deal” they have been looking for. Happy consumers, good news, buyer spending, confidence in the housing and real estate sector will return.

Yes, if you are a seller, times are tough. However, be patient. Prices are starting to correct enough to stimulate buying. Lower prices, means more buying, more buying means less inventory (supply) . Less Supply, in simple economics, means more demand. Prices then go up. It’s almost that simple.

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Copyright © 2008 By James Wexler, All Rights Reserved. *5 Reasons why Bad News for real estate buyers is Good News!!  (continued from yesterday)*

Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs.

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