I guess I need to stop being surprised at how much the media affects the way we feel. According to the latest must read, "The Secret," we feel the way we think. Keeping that in mind what we think is rather important. Okay, I'm a Realtor, so let's be specific and apply the media's impact on the current real estate market. Obviously, the news today is reporting the declining values of real estate, mainly in comparison with some prior year. It's not that the news is inaccurate, because believe me, property values have plummetted. Why, you ask? Well, there are quite a number of real economic factors such as the current state of the mortgage industry, over 100 lenders have closed their doors within the past months, and those that are still loaning are not doing it so freely anymore. The subprime market is all but gone. We had to rebound from 2004 & 2005 when we had property appreciation values 'average' around 35 percent...did I say 'average'? Real Estate Investors are no longer in the Phoenix real estate market, the new anti-immigration law is scaring some...are you legal? Not to mention it's just way too hot to even think about moving...and the list goes on. Okay enough real factors that very well SHOULD affect our current real estate market, but what about the impact the media has on property values by reporting the decline of property values?
I'll take the impact of all the "real" factors causing our real estate slowdown, but I really believe what we are experiencing now goes beyond that. Just as in the last peak of the real estate market in 2005, it was being reported on a daily basis how real estate values were climbing. It was crazy - do you remember?...vaguely?...no?...sad, but let's move on. Anyways, prices shot up so astronomically that it went beyond the real need or value for the buyers. As can be seen now, the transactions during that timeframe are coming back to haunt many. But what caused so many people to get caught up in such a feverish buying frenzy? There were so many buyers over-extending themselves, competing with wise investors, some even becoming amateur investors themselves, some throwing caution to the wind and waiving appraisal contingencies, waiving their rights to an inspection,...and sadly for the mortgage industry, waiving their right to put any money down. So what is it? What is the one underlying reason that caused so many people to forego rational thought during this frenzy? One thing...CONFIDENCE. Confidence that they were making a wise decision. They seen it in the news, they read it in the paper, they heard in on the radio, they heard it at the water coolers from their coworkers, it was everywhere. Real Estate prices are climbing and if you put your money into real estate you can do no wrong. Well, guess what?
Okay fast forward to today. It's happening again! This time it's the opposite extreme having the opposite effect, but nonetheless, it's happening again! Beyond the reasons why some people are unable to buy right now, is an incredible amount of people that CAN buy and SHOULD be moving right now, but are not. Why? Prices too low? Too many incentives being offered? Too much negotiation power? Too many choices? I know all of that sucks, but do you know the number one reason why people are not purchasing homes today? You guessed it, it's "Lack of Buyer Confidence." That's it! It's not that they cannot get a loan, it's not that they can't find the home they want, it's not that they can't get their name drawn in a lottery -- it's their confidence level. That's the wrong reason! It's the wrong reason because again, it's caused by them getting caught up in what is being reported rather than "real" economic reasons. Please allow me to make an analagy of the current state of real estate with the ocean. Love the ocean, don't you?...peaceful, tranquil, deep.
There's a huge amount of people that are not in the "buying" state right now, not because they shouldn't be, but because they're being told not to in an indirect way based on all of the reports of the declining real estate market. Again, it's not that the news is inaccurate, it's just the impact that it has on the way we feel, and ultimately what we decide to do, or not do. I relate all of these people to this huge oceon swell, the longer they wait to move, the more this swell grows. These people will wait long enough until they cannot take it any longer, this is the swell as it nears the beach. A few will jump early and decide to move despite reports that the real estate market is not improving. The few that jump will end up looking around and realizing, "Wow, I should have done this a lot sooner". These few will end up realizing some incredible "deals", or back to our analagy, have the choicest waves. The swell will break and come crashing onto the beach bringing with it all those people that waited not because they couldn't move earlier, but because it didn't feel right. At this point the news will change reporting how the tide has turned and it's now a "Seller's Market" once again. But, guess what? Good for you who waited. You waited for higher prices. You waited for all those incentives to go, bye, bye. You waited for that perfect home to be snatched out from underneath you.
Would you like a new or bigger home right now, but feel that now is just not the right time? You have to ask yourself what is causing you to feel that way? Is it the constant news of a declining real estate market. If it is, that's the absolute WRONG reason. To find out if now is the right time to move despite the current market, do yourself a favor and contact The Tim and Kym Team at ArizonaEHomes.com. If now is not the best time for you to make a move, we will definitely tell you just that. But if there's no "real" reason for you not to be making a move right now, guess what? We know of some pretty unbelievable homes out there right now at some crazy (low) prices, and we can get you some incredible incentives to boot. You will be one of those lucky few catching the choices of waves. Cowabunga!!