Is This The Bottom of The Real Estate Market?

The biggest question I am getting from both home buyers and sellers right now is this:  "Is this the bottom of the real estate market dip?"  Buyers are asking because they do not want to buy a house only to have it depreciate in the short term.  Sellers are asking because if this is the "bottom" and house prices are going to go up tomorrow, they want to wait to sell.  What both buyers and sellers need to understand is that there are many factors that they should be considering and that the "bottom" is not an event, but rather a process.  The timeline of this process will vary from state to state, city to city, and neighborhood to neighborhood.  Both buyers and sellers need to consider all of the factors and their personal circumstances to make the decisions that are right for them.

The real estate market recovery is tied to many complex economical factors.  It comes down to consumer confidence.  If people are confident that the economy is turning around, it spurs the recovery.  We all know that the unemployment rate is tied to the real estate market.  If people are fearful that they are going to lose their job or have already lost their job they are not going to be thinking about buying a home.  However as the unemployment rate drops more buyers will qualify to purchase a home and have the confidence to do so.

Along this same line is that when people start to feel confident in the economy they start to see real estate as a good investment.  Buyers tend to look at the short term, rather than the long term.  Most buyers do not want to buy a house only to have its value drop in the short term.  But they need to look at the long term;  what the house will be worth when they are ready to sell.  As they gain confidence in the economy they start to see even the short term benefits of buying a home.

So sellers should wait to sell?  No, not necessarily it will depend on why you are considering selling.  If you are buying another home, why wait for prices and interest rates to go up?  The longer you stay in the current house, the more you are investing by paying on the current mortgage, put that money toward the new mortgage and property.  Why wait for everyone else to figure out that now is a good time to sell?  You might have more competition if you wait.

The recovery is a process not an event.  We are not going to wake up one day and have everyone feel confident in the economy.  It is a process.  We are seeing the unemployment rates drop.  Interest rates are unbelievably low.  The shadow inventory that had us worried about a double dip recession is shrinking.  Builders have started building.  We are getting multiple offers on listed properties.  These are all sign that the process has begun.  More and more people are realizing that the doom and gloom we have been living under for the past few years is lifting.  Yes we are in the process of recovering and yes the worst is over.