Sometimes, we need to look at the market from a historical perspective in order to understand where we really are today. Real Estate markets are constantly changing, prices and trends can be, and often are, different that they were as little as 3 to 6 months ago. But overall, we usually find ourselves in either a buyers’ market, or a sellers’ market, and of course, that tricky “transitional” market between.
The basics of markets have everything to do with supply and demand. And what’s true in one market is not necessarily true in another market. Remember: All Real Estate Is Local…so buyers and sellers need to rely on a local market expert, rather than national news, to get the real story.
Let’s look at the Frederick real estate market and the recent history:
We’ve just come through what many called a buyer’s market. From 2007-ish through 2012-ish we had a large inventory (as high as 2400 homes on the market – a normal market is 1200) with little demand. We saw values declining as much as 40% from the high of 2006.
It was a hot sellers market between 2000 and 2005, with many more buyers than there were listings, and with an average of 400 listings at any given time. We had multiple offers on most listings; buyers had to offer more than list price, and forego home inspections sometimes to win the listing. Values were increasing at 20% a year, year-over-year, mostly due to the low interest rates and ease of financing, and simply, the high demand.
Additional Reading: What We’ve Learned from A Decade of Real Estate Woes, by Anita Clark, Warner-Robbins Georgia Realtor …or… What Wikipedia Cannot Tell You About Real Estate!
The market from December 2005 to today has seen dramatic changes, with lots of transistions between a buyer’s market and a seller’s market. The lending industry has been in transition as well, with the sometimes drastic tightening of lending standards, and with new lending programs coming and going.
Additional Reading: Is It a Buyer’s Market or a Seller’s Market? And what difference does it make? It makes all the difference to your buying or selling strategy.
Fast Forward to 2015
We are now in what many are calling a sellers’ market. With an inventory of 1200 homes on the market in Frederick County, what we would consider a normal number, the increase in demand makes it a tight inventory. Add to that the fact that the majority of homes on the market are not “move-in-ready”…they require a little elbow grease or TLC. Today’s buyers find that they have fewer homes to choose from, and they are facing competing offers on the best homes.
With interest rates still at historical lows, buyers can expect competition. As long as they have good credit scores, the downpayment required for their loan program, and are ready to act when they see the house they like, they should have success. A competitive market is not the time to linger over decisions.
For Further Reading: 7 Tips to Help a Home Buyer Win in a Multiple Offer Situation, by Kyle Hiscock, Rochester NY Realtor
Buyers: Get Preapproved
When the competition is high, it’s a good idea to go ahead and get pre-approved by a local lender, rather than just get a pre-qualification letter. The difference is that you’ve been through the approval process before you put an offer on a home. It takes a little paperwork upfront, but it can be worth it when you are in a competing offer situation and you are already approved, vs. the other guy who just has a pre-qualification letter. You will already look like more of a sure thing.
For Further Reading: The Difference Between Pre-Qualification and Pre-Approval, by Bill Gassett, Metrowest Massachussetts Realtor.
Credit Scores Still Count
As lending has tightened up over the last decade, it’s still important to monitor your credit score. The better the credit score, the better your interest rate. There are loan programs for those with lower credit scores, yes, but the higher you can get your score, the better for you in the long run.
So, as in the days of old, (before 2000), we all need to keep vigilant about our credit scores, clean up our tarnished credit, and keep our good scores good. Common sense lending practices are in effect, with more lending programs opening up for today’s buyers.
As usual, we recommend using a local lender. Having a relationship with local lenders gives us accountability and helps us help our buyers. We like the 36″ rule…keep our lender close enough to reach out and strangle them if the loan process breaks down! Contact the Highland Group for referrals on a great local lender, and for a personal tour of Frederick Homes for sale.
What About Your Market? Are you seeing a hot 2015 market … or a simmering summer?
Frederick Real Estate Online Further Reading :
Video: Eight Credit Score Myths