How's The Market? BUY, BUY, BUY! – Part Two

In the , I began to discuss why I think right now will be looked back upon as a watershed period in Smithtown real estate history.  Those who saw the opportunity to find a home they could grow and live with for the next 8-10 years will be seen with envy by their peers who were not in a position or could not see the wisdom to invest when the future of the economy seemed less certain.

SUPPLY AND DEMAND

If now is such a great time to buy, wouldn't we see buyers come back in droves, causing the (Okay, everyone try to recall Econ 101!) "invisible hand" to come in and make prices go higher?  The answer is absolutely, "YES"!  The reason this has not happened is because there are not enough people who can qualify for a loan at the moment and investors can only do so much.  During the housing bubble it was far too easy to buy a house and now as a result of our nation's mistakes, I believe financial institutions and the government have over-corrected in providing an ability for regular people who are capable of keeping a home, to actually get approved for loans.

The other major reason is far murkier and difficult to forecast.  With the bursting of the housing bubble, a tremendous number of banks were forced to foreclose leaving what we in the industry refer to as "shadow inventory".  This means that the banks have ownership but have yet to release it for re-sale on the open market.  The rate at which these homes do enter the market affects the home values for all. Were they to release them all at once, it would mean devastation for those who still have equity as well as the entire U.S. economy.  But, there is a double edge sword because we will not see a proper recovery until that shadow inventory is finally wound down to a negligible amount resembling default numbers of a pre-bubble market. 

GOLD & REAL ESTATE

When smart money leaves stocks and dives into bonds, rates (as I've said) go down too.  At some point, it will no longer be worth it to invest so much in bonds.  What will remain will be the old tried and true safe havens for wealth; gold and real estate.  Both are hard, physical items with a relatively known fixed quantity in the world.  Gold is already trading at record prices and perhaps real estate will be soon to follow for those with the patience or need to hold on for another 10 years. What we need are sensible guidelines for purchasers and investor friendly laws for homes that have fallen into disrepair through economic distress.  

These factors leads me to conclude that if you are able and want to own a home... Go out and BUY, BUY, BUY!  In my opinion, 10 years from now, today's buyers will look like geniuses.  

This Week’s Core Score = 8

Core Score - The Lenard Team's core number indicating the overall strength of the market that incorporates inventory & price trends and our perception of buyer & seller motivation. 1 represents an extremely strong seller’s market while a 10 indicates an extremely strong buyer’s market. A 5-to-6 would represent an ideally balanced market for most buyers & sellers.

Was this straight forward and clear OR difficult to follow?  Leave a comment and let me know or find me at my Facebook page: Facebook.com/thelenardteam