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Colorado Real Estate | The New Housing Market

Local and national media has been rampant with negativity regarding the housing and lending market. How do you know what is the truth in your area of the country. The most important thing to understand about the real estate market is that it is locally dependent. For instance, while there have been some slow downs in Ohio, the markets in San Jose are hotter than ever. So when the media reports that “housing prices” have decreased 1 or 2% nationwide, that is a reflection of all markets together, and it isn’t necessarily an accurate reflection of the conditions in your specific neighborhood or city. Consider further that despite last year’s real estate issues, according to the National Association of Realtors, it was the 5th best year of home sales ever recorded! Also, it is expected that 2/3 of local markets in the US will report price gains for 2007! This is why it’s particularly important to consult with your Realtor if you have concerns about home values in your neighborhood. They will be able to give you a truly accurate reading of the local trends and expectations. Predictions regarding when the housing market will “turn around” are as mixed as predictions that the psychics make about the end of the world every year. What is important about this is anyone who literally could predict the real estate market bottom would be very wealthy indeed. Again, the most important information for home owners is what is taking place in your neighborhood. Employment rates and job growth are very strong indicators of housing market strength. As long as these two factors remain strong in your particular area, housing should do well.

Note that in Michigan, where housing markets are somewhat tenuous, the unemployment rates are higher than average. While housing (like many other markets) is a cyclical market, the data still shows that long-term home ownership is a solid financial bet. Your safest bet is to treat home ownership as a long-term decision and not a get rich quick method. Another topic you may have concerns about is obtaining a mortgage. Much of the media attention has recently been concentrated on the disappearance of the sub prime market. The sub prime market may have largely disappeared, but it is expected to be replaced by FHA loans. As of this writing, FHA limits still max out at $417,000 (depending on your area) but Congress is constantly considering new legislation to increase FHA limits into the $600 levels. The political and economic atmosphere in the near future will likely determine whether or not anything happens with this. What is important to note is that FHA loans are not credit score based but largely income based. If you had a bankruptcy or foreclosure at least two or three years ago, you may still be able to qualify for one. FHA candidates should be current in paying their bills, but will not be excluded due to extenuating circumstances such as a death or divorce in the family.

You might find that your home is worth a little less than you had hoped when you go to sell it. You can hold off for a while until home values increase. Or you can sell now and while you won’t get as much as you hoped on the sales end, you’ll be able to make up for it on the buying end. You can also consider renting your home out instead of selling. The guidelines for qualifying for another mortgage vary so check with your mortgage broker. Understand that there are tax implications to owning more than one home as well, so consult with you accountant about the best way to go about that. While the foreclosure and declining home value topic seems to make for interesting headlines, unfortunately it’s generally not all that applicable or accurate to individual markets. So don’t hesitate to direct your real estate market questions to your Realtor or mortgage broker if you want to know what home values or available credit is like in your area.

Tom Reed and Bill Brown are local authors and real estate experts of Legacy Real Estate Brokers Inc. in
Denver Colorado. You can visit there website at www.discovercoloradorealestate.com

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