May 2010 - Short term flippers and speculators are gone finally.... both from the residential and commercial markets. Longer term investors are finding some projects. Average sale prices in residential are up about 1% over last year. The number of transactions are up 9.2% over last year, and inventory is down 14% over last year. Condominium sales prices are still under pressure from short sales and foreclosures. Detached Single Family homes are stable to improving over last year.

From the highs of May 2005 we hit a low of 45% down from those prices in November 2009 and though improving we are still 37% down from those highs now of May 2010.

If you are looking to buy now, our advice is to try to find a comparable property to the one you are considering that sold in 2005 to early 2007, and then subtract 35% - that’s a good starting place. Additionally, go back to 2003/2004 where you may find more comparables and expect today’s prices to be similar to those. We ask the selling agent how they arrived at the price – is it what the seller wanted, or have they used recent or historical comparables? Many selling agents are still putting property on the market at an inflated price. There is still a lot of psychological game playing, so if you’re a buyer, negotiate carefully. The market is still volatile and uncertain.

Being at, or near, the bottom of the market is a great place to be in buying terms. However, buyers shouldn’t expect to see the value of property increase in the short or possibly even medium term. We are in the unusual position where inventories are coming down, but not enough to make prices rebound. The market is reliant on available financing and confidence.

So who is (and who should be) taking advantage of low prices and cheap money? Anyone who was fortunate enough to have sold before the market went into freefall, or who is in rented accommodations because they chose not to buy at the top should be taking this opportunity to get into the market. The interest on their capital will be struggling to finance their rental fees, so unless they can only make short term plans, it makes little sense to stay out of the market now. And for those looking to upside or downsize, look for owner financing, rent out your existing home for five or six years, and get into your dream home now.

Many investors are starting to take advantage of low prices and the expectation of a strengthening rental market, due to the Air Force Base Realignment and Closing (BRAC) plan. Gross rental returns of as much as 7% are achievable if they buy wisely, and if they have enough equity to qualify for attractive finance offers.

If you need assistance in your next real estate aquistion we would be honored to serve you.