The Current Housing Market- History Repeating Itself

Why does real estate always appreciate over time? The answer is simple-demand for real estate may cool off, slow down, even get stubborn at times, but it never goes away.Most people know that the housing market, like so many other economic forces,moves according to a cycle. Understanding the market cycle allows us to know what is coming next.

Here is the housing market thru 3 cycles; you will begin to see the pattern emerge when you observe how history repeates itself 3 times:

CYCLE A :This shows a history of the housing market from 1980 to 1991:

CYCLE B: A similar pattern emerges in the period 1999 thru 2001:


CYCLE C:  Our current cycle:



See the pattern? Now look at the U.S.Census Report of housing prices over time:

So while housing “cycles” it has always appreciated over time, and notice in the chart above that even in our current cycle 2010 prices were still ahead of a decade earlier, with the correction we have just seen.

Now is the absolute best time to invest before the market ” cycles” again; historic low interest rates, housing prices flat but poised rise, all tell us the buyers- market days may be numbered!


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The Future of Short Sales

Having seen the most recent statistics that tell us we have potentially a 9 year supply of short sales in the pipeline, I decided it was time to jump on board and learn to list and market short sales…the difference is I want to learn to market them correctly. What do I mean by that?

It seems the current trend with few exceptions is that any agent will market the idea that they handle short sales and then just pick an arbitrary sales price and throw the house on the market. After a long wait and finally getting an offer, they completely surprise the bank with the news that this house is being offered as a short sale and then shove the offer under the bank’s nose for review. The result? Most usually a long wait followed by either a “NO” or a counter-offer at a much higher price and then the disappointed buyer moves on to another home. That is the wrong way to market a short sale. It serves neither the seller nor the consumer let alone the bank and we have to consider all three parties in this type of transaction.

After completing an intensive short sale training series of classes designed to educate agents on proper Bank procedure, I found that the process begins by educating the seller. Banks see a short sale as less about the home sale, and more about the seller. As agents we must understand their perspective to get inside their approval process. The process can be quite smooth and successful following bank procedure, but is starts with some very impactful decisions on the sellers part, followed by proper procedures that lead in the end to listing the home with the banks knowledge at a bank pre-approved price, not a blind guess behind the bank’s back. Further, the sellers pre-marketing decisions can mean the difference in whether the bank eventually comes back to them for recovery of the loss, and/or if the IRS also comes after them for the loss as a net gain on their taxes (these forgiveness benefits are set to expire at the end of 2012). Few short sale agents first inform the seller of potential consequences that can possibly be avoided by following procedure. All banks have guidelines for approving a short sale pre-marketing, and also for clearing up these issues for the seller prior to this final step. First and foremost, a seller must understand the benefits and also the potential liability they have by offering their home as a short sale, and then proceed only with full knowledge.

Having said all of that, a short sale can potentially be the best thing for a seller who meets the bank’s criteria. A short sale does not have the same stigma as nor the credit ramifications as a bank foreclosure, and can enable the buyer to walk from closing with relocation cash from the bank in most approved instances.

What are the approvable circumstances for a short sale under your bank’s criteria and how do you apply?

How can you be smoothly processed to quickly reach resolution with your lending institution?

What are the potential liabilities for the seller and how can these possibly be avoided?

What are the benefits and how does a seller leave closing with a relocation allowance from their bank under approved circumstances?

How does a seller get pre-approved for short-selling their home prior to marketing the home, and how long and complicated is this process?

Call me for a consultation if you think a short sale may be right for you.


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