Sunday, April 01, 2007

Real Estate & the Economy

Business Week televised a couple of good items about the real estate industry as a whole yesterday. Their video can be seen here: I've pulled information from other current videos as well.

Some of the bullet points I thought were important are:

Buyers still have an edge in real estate.
Seller's are becoming more flexible and responsive to buyers' terms. It was specifically pointed out that buyer's who low-balling the selling price won't produce the desired result and indicated that 10% below asking was a reasonable price reduction to request.

Seller's can increase their returns by upgrading with environmentally friendly improvements. Shown by the trend in eco-friendly home buyers.
Sellers were directed to post at least 6 high-quality photos (recommended by because 80% of home buyer's check out listings online before touring in person.

Buyer's too have some work to do like; giving a boost to their credit score, and finding the best deal (budget friendly) on a mortgage.

Mike Mandel, Business Week Economist, talked about the economy as a whole & the real estate market's effect on it. He says there are factors other than the mortgage market that consumers should be keeping an eye on.
Mike pointed out that 30 year fixed rates are actually lower than they were a year ago and that borrower's who have an adjustable rate mortgage, and decent credit will have little trouble re-financing into a fixed rate and will be "sitting pretty".

As a whole the mortgage market is doing just fine, though the sub-prime market is in a bit of trouble. The market will no doubt affect the economy but won't cause a recession according to Mandel. One of the more important aspects to watch closely is business investment which he says have slowed and is at very low levels.

Also the increase in foreclosure activity was localized to areas that didn't have strong real estate markets in the first place.

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