Jim Valentine on real estate
Things have been stable for a long time with low interest rates, low inventories and strong demand keeping the market strong price wise. Buyers adapted along the way, making adjustments that allowed them to buy in this dynamic market. Sellers spent much of their time wondering when to enter the market and wondering if they could achieve their replacement property goals without being homeless.
Over the past two months, interest rates have risen, but demand is still good. Prices are falling a bit, but they are not crashing like they did in the last recession which started in the fall of 2008. Sellers who were timing the market are coming into the market to avoid missing the surge in pricing, and they seem to be pricing their properties at market price rather than the inflated pricing that so many people tried a short time ago.
Now the media is starting to stir things up. There are stories about the current market and how it will change. Many sectors of the media speak of a new recession. They’re not very speculative about it; they seem to be very sure of it. As they talk about it, they drive home the point when it comes to real estate. Along the way, they talk about higher interest rates and the need to raise rates to fight inflation, and how all of that will trigger a recession. Some continue to estimate how long we’ll be in a recession, and it seems every comment is steeped in negativity.
Some things that are overlooked include investors’ decision to shift their money from stocks to real estate. It’s one of those facets of the financial world that seems to fluctuate steadily over the years, with investors switching from one type of investment to another, depending on how their respective markets are changing.
Stocks have taken a hit lately, but real estate is holding up. Investors looking for income properties are seeing rental rates currently holding near or at all-time highs. The ability of tenants to replace their rental with purchase is somewhat compromised by higher interest rates, but rates are still very reasonable overall, resulting in a rental market and of sales that interact and compensate each other well.
Real estate is again in the media bullseye. They bring in experts who talk about finance, real estate, inflation, investors, etc. We find it interesting that there is so much pressure to create a negative image as buyers actively seek to buy. Most buyers are now in cash or getting a loan with the understanding that they will refinance in the near future as they are optimistic that rates will come down in a few years. This mindset is not unlike driving on vacation while gas is $5-7 a gallon because you want it. They want to own a house and will temporarily pay a little more so as not to lose too much time in their life project.
The long recession that began in 2008 began a period when many people had to put their life plans on hold. Major purchases, vacations and family reunions have all been delayed. Things were back to better than normal for a while, then the COVID-19 virus commandeered their life plans and things were put on hold again. What we are seeing now is a major pushback from people who are tired of delaying their lives. Revenues are up as are expenses. We can get through this time of uncertainty and move forward happy and strong despite the media propaganda.
Set your priorities, set your goals, create the vision and take action. You will be amazed at how easily you can buy or sell with a good experience despite what the naysayers say will happen to you. What’s important is that you achieve your real estate goals and enjoy the fruits of your planning and action. Again, “It’s the good old days!”
When it comes to choosing professionals to help you with your real estate needs… experience is priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. [email protected]