What' So Bad?
Just so is today’s REAL ESTATE MARKET. Having the disadvantage of age, I remember too much, and too well, the bad old days of the past.
Entering the real estate market place as a new licensee in 1980, I confronted a market where unemployment was historically high. Marble Hill had just shut down. What is Marble Hill you ask? It was a nuclear power plant project east of Charlestown that was stopped, throwing the local economy into a dither. Labor unrest at GE, and Ford, also had Louisville’s metropolitan area employment confidence at a low spot. Couple all this with mortgage rates at 16%, due to out of control inflation, and you have a terrible market.
As terrible as that market seemed, it was a great time to enter the real estate market. Agents learned the correct way to market properties. Clients did not think the agent was overpaid; they earned every cent of their commissions. An additional benefit to buyers and sellers was how creative agents developed creative strategies to market every property on the market. Additionally, lenders participated in creative lending situations that help clients through these tough times.
In retrospect, “tough” seems like an understatement when describing my first three years in the business (1980-1983). Yet, through these three years, Southern Indiana still saw price appreciation. Southern Indiana still saw the number of transactions increase. Southern Indiana faired better than the rest of the nation, better than Indiana, and better than Louisville.
I also remember the market of 1991-1992. During these years, we endured a national recession that flattened price appreciation and lengthened the number of days needed to market a property. During that time, new construction glutted the market, and it took a few years to absorb that glut, but no great catastrophe occurred.
In hindsight, today’s market doesn’t even close to times that “try men’s souls.” Unemployment levels are historically very low. Some might argue that we are at or near full employment. UPS and other industries continue to expand employment opportunities, and as an area, we are continuing to get better at attracting new employers. Although mortgages are a little harder to qualify for, the rates are extremely reasonable. Consumer confidence isn’t as high as last year, but it’s not bad, and traffic at open houses is brisk.
We do find ourselves at a time where new construction is glutted, but that’s a buyer’s opportunity. All in all, this is a great “move-up market time.” How could that be, you ask?
Let’s say the market is off 2% in value from its high of last year. I own a home that was worth $100,000 last year, so this year I am able to sell it for $98,000. I lost $2,000. I qualify to purchase a home for $200,000, if that home is also de-valued 2%,that means I bought a home that was valued at $204,000, I saved $4000. To recap, I lost $2,000 on the sales of my present home, but saved $4,000 on the purchase of my new home. At the end of the day, I saved $2000 and am living in the home of my dreams, not a bad deal.
This market is full of these opportunities. You need a Realtor who understands investment, and when real opportunities present themselves. You need an agent who is capable of thinking creatively and positively about your opportunities. I think you have come to the right place and I hope you will return to our website when your real need arises.
CFO, Schuler Bauer Real Estate Services