TIPS FOR BUYERS
2010 Buyer's Market
The Perfect Buyers’ Market: Conventional wisdom would say the Perfect Buyers’ Market occurs right after the market bottoms out. The problem with this scenario is three fold. One, it takes six months after the market truly hits bottom to actually verify. Two, once the market truly hits bottom Sellers lose their motivation and start raising their price, trying to recapture all the equity they can. Three, every other Buyer starts bidding.
Contrary to popular belief the following is what actually makes the Perfect Buyers’ Market. NOTE: The Jackson Hole real estate market has never seen all of the following components at the same time:
• Demand is at an all-time low: The number of overall sales is down 47% when compared to the same period in 2008. In fact, the last time Jackson Hole recorded so few sales, in the first six months of the year, was back in 1984.
• Interest Rates are at an all-time low: The interest rates being offered today haven’t been this low since the late 1960’s. While lending guidelines have tightened in the past 18 months, there are excellent loan opportunities for Buyers with good credit. In fact, first time home buyers can work with the FHA or VA to qualify for low down payments and may qualify for as much as an $8,000 tax credit. Jumbo loan limits are higher in Jackson Hole. This means you can now borrowup to $693,750and still be considered low risk. The end result with low interest rates and higher limits; increased buying power for locals!
• Inventory levels are high: Jackson Hole inventory is up only 4% when compared to the same period in 2008. Look back just two years though, to 2007, and the current inventory is up 41% (388 versus 549 properties on the market).
• Motivated Sellers: (Any seller with a strong incentive to make a deal): While it’s impossible to guess just how many motivated Sellers there are, one thing is for sure, the number is growing. Some need to sell to survive the recession; some want to take advantage of another real estate market, where properties are being sold for way below replacement cost; others need to sell for personal or family reasons.
• Property values have dropped to 2004-05 levels: While a large percentage of the current inventory is still priced close to the all-time high (fall 2007), the properties selling are priced at 2004-05 levels. NOTE: Jackson Hole has not seen an across the board reduction in real estate prices since 1985.
Advise for Buyers: Figure out what a particular property is worth to you right now considering your top parameters and goals. Forget about timing the market and buying at the bottom, as there are exceptions to all trends. Come up with an offer that makes sense to you, regardless of asking price, comparables, appraisals, competitive market analyses and the unsolicited advice of your overly opinionated brother in-law in Florida.
According to Christie's Great Estates, savvy buyers are recognizing opportunities in this challenging economic climate by acquiring real estate while prices are at historic lows and inventories are high. "I believe people will look back on 2009 and regret not buying real estate," says Kay Coughlin, President & CEO. "Trophy estates are being offered for sale, some of which have not been on the market for generations. Prevailing economic forces are creating a value proposition for qualified homebuyers that will not be available for long."
First time homebuyers: There has never been such a Perfect Buyers’ Market for first time homebuyers. Low interest rates, increasing inventory of affordable housing, motivated Sellers and an $8,000 tax credit. If you can’t afford the down payment ask your parents to help, or make them a partner in the investment. You can also form a partnership with one or more friends. The bottom line is doing whatever is needed to take advantage of this Perfect Buyers’ Market.
Jackson Hole Real Estate Associates LLC team can serve as your guide to locating these bargains. Call 307.734-9941 and ask for Devon or David or visit www.jhreassociates.com to learn more.
