The global economic meltdown and the subsequent recovery have ended the real estate boom. The extremes are nearly over giving way to a much quieter market situation. Consequently, buying a home is much easier and hassle free today, as there is a lot more certainty in the market because of the sideways price movement.
Should you as a buyer be happy with the current trends in the market? And what about those who want to sell their houses? Is selling a completely unprofitable option at present? Well, the latest market offers new advantages and challenges to both the buyer and the seller. Keeping the following pointers in mind can help you deal with the current housing market.
Estimates suggest that about one-fourth of homeowners who bought their house on a loan in the last few years now owe more to the banks than the price of their house. As a result, a number of banks are allowing owners to sell their homes for a sum less than their debt amount, a process known as short sale. Even the government prefers shorts sales of troubled property than foreclosures.
These trends have prompted banks to sell properties owned by them at prices which are nearly 30 per cent less than the market rate. But there’s a catch. If you choose to purchase a bank-owned property, you will be asked to make a heavy down payment, which can be 20 – 25 per cent of the value of the house.
As a buyer, this is undoubtedly a good time to strike a bargain. But you have to remember that house prices might go further down. There have been news in the last few days, suggesting that the market could see a new wave of price shocks. If that happens, today’s good deal could seem like a bad decision a few months from now.
So be careful and be patient. Never rush into a deal. Remember that right now there is a lot of supply for houses but not enough demand, which means that even if you miss a deal, you are quite likely to soon get another one that is equally good, if not better.
Even as a seller, this is the time to be patient. Unless you desperately need cash, you should not try to sell your property in a hurry. Wait for a few years and your house might fetch a much better price.