Friday, August 17, 2007 - The Sky is not Falling

The Sky Is Not Falling

The recent woes of the sub-prime mortgage market and the decline of the stock market seems to have everyone singing the blues. "THE SKY IS FALLING! THE SKY IS FALLING!" the naysayers are chanting. But, in reality, the sky is not falling. Instead, the current economic situation needs to be looked at in a more realistic light.

I remember the early 1970s with interest rates bouncing around in the high teens and people standing around in lines to buy gas. I remember the S&L Crisis of the 1980's. It was all gloom and doom then, too. Bookshelves of new regulations and the forced licensing of the appraisal industry did little to prevent today's economic climate. (Maybe they should have looked at loan originators a little harder?) I remember the slow-down of the early 1990's, hardly a wrinkle in the economic fabric of our country. In each case, the economy eventually turned around. Did some people get hurt financially? Certainly they did... but only a relatively few. A lot of people also prospered during those times. Especially those smart enough to take advantage of the depressed real estate and financial markets.

Remember the No. 1 rule of making money? Does "Buy cheap and sell high" sound familiar? From now through next year will be the time when the smart are buying cheap. Those with the cash to hold a under-performing property until the economy turns around may make a fist full of money.

Historically, when the economy comes back, it bounces back. There is a steep surge in growth and prices as the pent up demand is unleashed. It is during the bounce back period that some the highest returns can be gained.

What does this mean for participants in the real estate market today?

For Sellers: Real estate will still sell. Sales will be slower and it may not be possible to get the price you were expecting, but we are still moving properties! Expect to be more flexible with your pricing and expect it to take longer to market your property.

For Buyers: Start looking now! We are entering the phase of the economy which you will be able to find the best buys and, upon recovery, you may be able to reap significant financial rewards.

People tend to shy away from an declining real estate market when they should do just the opposite. When the market is down is when you should jump in with both feet so you can reap the benefits of recovery. If you have ever thought of buying, the next 12 to 18 months is probably one of your best opportunities to do so.

For homeowners which must relocate: You may not get what you were expecting from the sale of your existing home, but remember, the seller of the house you are buying is selling under the same economic conditions. When the economy turns around your new home should benefit from the recovery.

Everyone should remember that the real estate market is cyclical. It goes up and it goes down. However, historically, the long haul trend is always UP, Unless something happens to significantly reduce the population of the U.S. (i.e. Bird Flu) or to curb population growth, the demand for real estate should continue to increase. So, just hang on. The sky is not falling, the naysayers just want you to believe that it is.

Oh, a note for the investor. With all of the foreclosures going on, where do you think the former homeowners are moving to? If you answered rental property, you win the brass ring. We feel that residential rentals should do very well in the coming years.

Chris & Brande Bradford
Seller\'s Advocates
Bradford Realty Group
1115-D Morrow Road
Morrow, GA 30260
404-993-5753: Brande\'s Cell Phone
770-961-5520: Office