CLARKONOMICS: It doesn’t matter what publication you pick up, there’s one bad number after another after another in the mortgage market. According to the Commerce Department, the sales rate for homes last year is the lowest on record since records started being kept 47 years ago! Then I also heard a Dow Jones reports that of the 28 major metro areas, every single one had a decline in home values at the end of 2010!!
The combination of anemic sales rates and declining prices creates fear and anxiety. A large numbers of home are vacant for a variety of reasons. But I will tell you the problems mean opportunity. I’ve been a buyer of distress real estate during the downslide of the last couple years. Looking back now, I see I was actually too early getting in the game. But I’m not upset because the opportunity of owning over time remains so positive.
We’ve reached a buyer’s strike and sellers are starting to capitulate in price. Looking at Realtor.com, I noticed that listing after listing said “price reduced” no matter whether I was looking at high-end mansions or entry-level townhomes. Sellers are finally coming to recognize that if you want a buyer, you’d better offer a really good price.
I recall the great deals people scored in the late 1980s during the regional depression in the Mountain States following the savings and loan crisis. In Denver, people bought office buildings at a total cost per square foot that was less than tenants might pay per square foot for rent in a year now.
Meanwhile, on the financing front, interest rates have inched up from their recent historic lows…but they still remain very favorable. The opportunity is there. If you are afraid to buy, I don’t want you to say, “I wish I would have done it in 2011.” Does that mean recovery will come in 2012? I have no idea. But the opportunity right now is extraordinary.