By James A. Crumbaugh, III
Note: I wrote this article at the very beginning of 2008. This morning when I walked out to the driveway to retrieve my newspaper, the headlines read, “Real Estate Market Is Turning Around.” The perfect storm is in full fury now. Watch the real estate market continue to improve.
RISMEDIA, Nov. 24, 2008-“The Perfect Storm.” What could I possibly mean when I say that the real estate industry is about to enter the perfect storm?
After 35-plus years in the real estate industry, I’ve watched good and bad markets come and go. There are always mitigating factors that cause these markets, both good and bad, to make an abrupt change. Those that have spent a couple of decades in the real estate industry will tell you this: when a market changes from bad to good or the opposite, it almost always happens very quickly, particularly when a market goes from good to bad.
I think everyone reading this article will agree – that is what happened this time as well, when the real estate market went south on us.
So what do I mean when I say that the real estate industry is about to enter the perfect storm? Let’s look at several factors. The first factor is (at the time the original article was published) a new national election was about to take place with a change of leadership.
Markets tend to pause when we are in this phase, waiting to sense what the change will mean. Next, with the possibility of a recession facing the United States, with several states already experiencing a recession, the stock market is going to continue to retreat.
When the stock market starts to retreat as it is now, investors almost always start to look at real estate, because it’s a tangible item-it’s concrete, something they can fully grasp.
Then, you have to take a look at where the real estate industry is at this moment. With the exception of Texas, we have in most states a severe real Estate issue facing this country. We have declining prices in most areas as well as a huge over-supply of inventory. Yet, we also have some of the most attractive mortgage interest rates available in quite a while, and contrary to popular belief, there is still plenty of mortgage money available for the qualified borrower.
Let’s now take all these issues and throw them into a paper bag, give that paper bag a good shaking and then dump it out. What do you have?
It is the perfect storm for the real estate market. Real estate prices are at a very attractive level. In fact in some areas, due to an over-correction, the properties are undervalued.
Mortgage interest rates are very low and very attractive and we have a huge over-supply of resale inventory. You add all of this together, and for the real estate investor and the natural real estate buyers, the ones who what to move up or move down or move to a new area or whatever the reason is, you have one of the very best times in years to buy property.
The year of 2008 is going to go down in the history books as the year that the current real estate market makes a u-turn and starts to stabilize and appreciate again. Everyone keeps saying now is the time to buy. Let me tell you, it’s not only the time to buy, it’s one the very best times to buy we will see for years to come.
James A. Crumbaugh is CEO of Allison James Estates and Homes Real Estate. For more information, visit http://www.allisonjamesinc.com/.