Real Estate: A Bumpy Road Ahead?

Imagine if we only had a crystal ball. Our major financial and life decisions would be so simple to make, and there would be no risk and no worries. Unfortunately, we do not have that luxury. Our decisions must be made upon solid data and information.

Over the past year, you may have heard a repeated message; now is a good time to buy. From the data we have, we do in fact know that it is a buyer’s market, and a good one. A wide variety of inventory is available, and interest rates are still low, making this an unprecedented time for buyers to take advantage of the market, and many already have.

In its latest release, the National Association of Realtors® states, "pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent" compared to the same time last year.

Unfortunately, there are several factors that could impact the future direction of this market, making the road ahead a bumpy one, and uncertain at the very least.

The tax credit has expired and many industry analysts and economists agree that sales will slowly dwindle into the coming months. To quote an article in the Wall Street Journal, on home sales, curb your enthusiasm, "While there might be strong data in future weeks, industry experts have long said that softness could follow once the incentive - essentially free money - to buy is taken away."

We are also uncertain what the Fed will do to interest rates. Rates have held quite steady, but it is anticipated that the Fed will increase them, and to what extent is uncertain. If the rates do increase, it could impact the type and size of home a buyer could purchase. Buyers could be priced out of the market with an increase of rates by only a few points.

Yet another unknown variable is the amount of shadow inventory that could come onto the market at any given time. Shadow inventory are homes that have undergone foreclosure, but the banks have yet to place on the market. According to an MSN Money article, home seizures by banks set a new record and "prices have stabilized in many areas because banks have kept these properties off the market, adding that banks will likely continue to do so until the economy picks up again."

Of course every local real estate market has slight variables. To determine exactly what has taken place in your market over the past month consult with your local REALTOR.

If you’re seriously looking to purchase a property, now truly is the time to buy. Don’t gamble on the future with so many unknowns up ahead.

And f you didn’t have a chance to take advantage of the Tax Credit, just visit NewEnglandMoves.com. There are many homes participating in the Coldwell Banker Buyer Bonus program offering a credit up to $8,000, or speak directly to me and I will be happy to assist you.

Regards,

Jay Burnham, VP

Coldwell Banker Residential Brokerage

North Shore, Massachusetts

Direct Line: 978.233.2828