5 Real Estate Market Recovery Myths ~ Some Rethinking Needed


Here are some current real estate myths that have been floating around and need some rethinking:

#1 – The market is recovering too fast.  Nationally, home prices increased 10.6% between March of 2012 and 2013, which seems really high to some people.  However, keep in mind that markets have cycles.  They will have highs and they will have lows, and this will keep on repeating, just hopefully not to such extreme levels.  It is important to remember to look at other markets, such as New York, where they didn’t really experience the downfall of the recession, where their year-over-year price increase is much lower, at only 2.6%.

#2 – The driving force behind demand is investors.  This is true in some areas, but overall it is on the decline.  In May, repeat homeowners were responsible for 43% of sales, 36% were first time buyers, and only 20% were investors.

#3 – Sellers are stuck.  Sellers in the past, who were underwater and had either no or negative equity in their homes, were the ones that were truly stuck.  Those homeowners are the ones that couldn’t sell, and thus didn’t have money to buy.  Today’s sellers have 3 options: to pull cash out to buy first (now that they have regained some equity in their home), refinance and stay, and the option to sell in order to buy a new home.

#4 – Rates are crazy high!  Yes, it is true that mortgage interest rates are increasing; and that the federal government plans on raising them too, but that isn’t supposed to be until 2015.  Last weeks rates were 3.94%….however in the 80’s rates were as high as 14%.

#5 – Foreclosures are becoming much less common.  Although there has been a large decrease in the newly foreclosed homes, we are still going to see them trickling into the market.  This is because banks and mortgage servicers were able to hold hundreds of thousands of homes off of the market for as long as 10 years, if needed, in order to avoid flooding it and bringing market prices even lower.  This inventory is still slowly being released back to the market.

To learn more about each myth and how to rethink it, please check out the full article here >>