There is much ado about the state of the real estate market, many gloomy headlines with long adjectives, and not a little confusion for buyers and sellers. Confusion is often the result of combining too many different issues at the same time. For buyers and sellers in this real estate market in Sequim and Port Angeles, it may be helpful to segregate apples and oranges.
A real estate slowdown always starts with new construction home sales. That is the economic trend. The ripple effect of a slowdown in new construction hits big companies like Home Depot, and the newspapers start to print dramatic headlines, which begins to spread panic in the rest of the real estate industry.
A slowdown in new construction leads also to an increase in inventory, not only of spec homes, but also in lots for sale. A slowdown in lot sales means developers find themselves with too much inventory and some have a line of credit eating up their profits for the year. Overly aggressive builders get increasingly uncomfortable for the same reasons.
The mortgage industry is effected with a decrease in new loans, and that can be compounded with excessive subprime loans as in the present market. The knee jerk reaction of the Federal Reserve, the banking industry, the savings and loan industry, and the mortgage industry is to slam on the breaks and reverse many current policies. For example, the current mortgage dilemma has been increased by immediate increases in minimum credit scores and a reduction in the types of loans available. While this is probably good in the long run, such dramatic reversals exacerbate the current economic crises in the real estate industry.
Each segment of the real estate industry is impacted in sequence, almost like a game of dominoes. Sales of existing homes begin to slowdown, and that tracks similar slowdowns in condo sales, manufactured home sales, and multi-family unit sales.
A homeowner who is considering selling his home, or a buyer who is on the prowl for his next home should separate all these varied components of the real estate industry, and focus like a laser beam on doing one thing: selling or buying in their local real estate market. That will simplify much, eliminate confusion, and with a more focused goal, one can develop an effective strategy to sell the home for the best price in a reasonable amount of time, or find that next dream home at a great price in the best area.
What is happening on the national front or the mortgage market should not deter a buyer or seller from doing what they intended to do anyway. While some homeowners are feeling very nervous about selling their home in the current market, other homeowners have multiple backup offers on their homes. Yes, there are buyers out there who are in the market, and it just so happens that now is the time for their retirement or their move, and they are going to buy a house, regardless of the national market or media headlines. And a seller who understands that fair market value is fair market value, will sell the home at a fair price in a reasonable amount of time.
So if you are buying or selling, pause and take a deep breath. Then develop a practical strategy to accomplish your goal of selling or buying, as you would in any real estate market. Take it a step at a time, and practice good judgment at each and every point, and you will be successful.