A Tale of Two Cities?


“It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness”. Those famous opening words, written by Dickens, set the tone for his famous novel back in 1859. Over one hundred and fifty years later those same words could be a potential headline today, describing the current real estate market.

Some would argue it’s the “best of times” for Buyers and the “worst of times” for Sellers, the “age of wisdom” for Buyers and the “age of foolishness” for Sellers. However, I would argue this may not necessarily be the case. In this two part series, I will explain how it could be the “best of times” or the “worst of times”, regardless of whether you are Buyer or Seller. How can that be, you ask? Well, it all depends on the advice you are getting and who you’re listening to.

First, let’s consider some current market dynamics that make it the “best of times” for Buyers:

• Tax Credits – For both First-Time Homebuyers and Move-Up Buyers

• Interest Rates – Currently still at historic lows

• Selection – Current Inventory levels offer a variety of options

And why might it be the “worst of times” for Buyers:

• Time – Upcoming expiration of the tax credit. Buyer’s MUST be under contract by April 30, 2010 in order to be eligible, and must close by June 30, 2010.

• Interest Rates expected to rise – The FED is intent on wrapping up mortgage bond purchases at the end of the 1st Qtr 2010. In light of this announcement, interest rates are expected to rise by as much as 1-1 ½ percent.

• Continuing to wait – Many buyers remain on the fence. Either waiting for prices to continue to decline, or waiting for additional choices assuming a “traditional spring market” mindset. However, prices would have to decline by over 10% in order to offset an interest rate increase of 1%, and the current market dynamics negate any past “seasonal” tendencies.

So, while most would assume the current market is more favorable towards Buyers, there are certain dynamics in place that Buyers need to be aware of and take in to consideration. The clock is ticking, opportunity is knocking, the Buyer who waits will fall victim to the “age of foolishness”. Check back in to learn how Seller’s are potential beneficiaries of the same market dynamics!

To be continued………………….