Last week I discussed surveys that indicated what trends are currently being favored by buyers and sellers and what predispositions regarding location and amenities are high on people's lists.
The conclusions offered were based on studies indicating the choices and options that currently emote the most enthusiasm among homebuyers. Obviously they're not absolutes, but they do provide a good idea of the direction the market is moving in and what tops the list in home-buying considerations.
If you're currently thinking of buying or selling, inevitably the question will arise: "Is this a good time to buy or sell?" The answer can follow the same criteria utilized above and in last week's column. By surveying and looking at the direction of current economic indicators, the educated answer would be "yes."
As it stands, the big increase in home sales around the country is being generated from four different sources.
· Low interest rates: Around this time last year I was bragging about interest rates being 7.20 percent, but currently rates nationally are about 6.76 percent for a 30-year fixed-rate mortgage. The average for a 15-year mortgage this week stands at 6.18 percent, down from a year ago when the rate stood at 6.74 percent on average. These are the lowest rates since Nov. 16, 2001. Finally, one-year adjustable rate mortgages have fallen approximately a point from a year ago to an average of 4.76 percent, the lowest they've been since April 1, 1994.
· New types of financing: Just a few years ago, a buyer needed to make a 10 percent downpayment to purchase most homes. But that's no longer the case. If you have a good credit history, you can put almost nothing down. Some loans will even cover some of the closing costs.
· Housing shortage: In many areas of the country there's a shortage of good housing stock. The inventory of unsold homes is approaching an all-time low, with supplies dipping to 30 to 45 days. Further evidence supporting this trend can be seen in the increase in apartment rents and home prices in general. All things being equal, apartment rates would fall as home sales rise, which would result in renters moving to homes and leaving an oversupply of rental units.
· Lack of alternative investments: With the current turmoil in the stock and bond markets, investors are turning to real estate. Compared to the paltry returns obtained from savings accounts or certificates of deposit, real estate is one of only good alternatives right now for investors.
Then, of course, there's the "X" factor. It could be a terrorist attack or an escalation of the conflicts in the Middle East or Asia. A meltdown of the dollar could cause a worldwide recession, or something totally unexpected could cause a reversal of housing's good fortunes.
Unlike other investments, however, you can usually live in or rent out your investment in real estate.
This Week's Tip
Sell your home "as is" to cut repair costs. If you're thinking of selling your house but are afraid about the cost of repairs necessary to prepare it for sale, take heart. There may be a way for you to cut down on the amount of money you spend.
For one thing, you don't necessarily have to make all the repairs before the sale. Use this strategy: Make the costs of any major repairs part of your negotiations. Let the buyer decide, for example, between a new roof and a reduced price on the house.
Of course, you shouldn't leave anything undone if it would jeopardize the mortgage approval.
STEVEN J. LOWENSTEIN, a native of Cincinnati, is a Realtor with Coletta & Associates Realtors. He's a graduate of the University of Cincinnati and holds a Master's degree from North Texas State University.
