Foreclosures and the Changing Real Estate Market
Residents of Sacramento have reached a new level of understanding about the real estate market, I think. While conversations during the real estate boom revolved mainly around how much their home had appreciated, now the talk is mainly around how much the market has been affected by the recent foreclosures. They seem to take a macrocosmic view of real estate as it is as opposed to the simplistic microcosm they were living in just about five years ago.
But the statement I hear most often is, “I wish I had some money right now. I would buy the entire street!” And while many are concerned that the market might continue to fall further, many others have taken the leap. We’ve seen the numbers rise for sales over the last year in every neighborhood and Sacramento county as a whole. Clearly, there isn’t as much anxiety over prices falling further today as there was a year ago.
Or is there?
Investors see this in the stock market every time - the tendency of most people is to think they are going to swoop in when the market is low, buy up everything and then make a ton of money by selling high. The reality is that most people feel confident buying a stock that has already performed well and then end up selling it when it is obvious it will not go any higher (at best) or when the price falls (at worst).
We see the same thing in the real estate market. When the prices of homes were headed up, homeowners were reluctant to sell and people felt more comfortable buying. There was not enough inventory for all the buyers. A home saw multiple offers on the first day it was listed and sellers couldn’t believe their luck. We see the opposite today. While many swear they want to buy a house at the bottom of the market (or close to) they are now holding off. The old adage of “Sellers sell in a seller’s market, but buyers don’t buy in a buyer’s market” is holding true, at least anecdotally. The overall numbers however are telling a different story. Clearly, some people are buying. These will probably be the same people selling when the time is right.
It’s time to review the numbers. It’s time to see what you can afford and head out there and start investing in the future.
