A New Year

Out with the old in with the new:

In 2006 we finally saw official end to the seller's market that was so prevalent for the past few years. What will 2007 bring? The most recent New Home and Existing Home sales reports demonstrated that housing sales were actually higher than economist’s predictions. The ultimate question is whether or not this trend will continue? The one thing that we can all count on is that buyers will have the final say as to what will happen.

Another important question to ask is what is the truth. Lets us not forget that the media is a business. Their business is ratings and/or the volume of news papers sold consistently. The hot topic is of course the decline of the real estate market, but to what extent are they misleading potential buyers in today’s market? Case in point, here is an actual quote from a recent MSNBS/Business Week article, "right now is not the ideal time to buy or move up, even with the recent price declines. The inventory of existing homes shot up 34 percent from October, 2005, to October, 2006, and now stands at nine months' worth of condos and seven months' worth of single-family houses at the current rate of sales. That backlog will take a long time, and a lot of price-cutting, to clear out."

Let us look at the logic of this statement. Inventory is up, which means that there is greater competition between sellers for fewer buyers so negotiation is ideal in the face of the buyer. Yes, this statement is correct with regards to the fact that it is going to take a long time to reduce the backlog, but what does that have to do anything. What does this mean. Let’s speculate where they are going. All of a sudden in some random month in 2008 when the media feels that the prices have hit bottom they will alert the buyers of the world to grab what ever real estate they can get their hands on? That is ridiculous. A buyers ability to negotiate for a home of their choice exists now. Not every seller is realistic, but then again, not every buyer is realistic.

It is time to swing the pendulum in a fair direction. It is time for buyers to begin to make reasonable offers for fair market value of homes and for sellers to sell homes to such buyers in a fair and competitive market. With that article's insane logic, clearance sales at department stores wouldn't work and Wal-Mart and Target would be out of business.