Being Realistic In A Changing Market

Posted at 4:01 AM, Apr. 7, 2008

In my last entry I talked about how the news we hear on an almost daily basis would make it seem like "sky is falling" in terms of the real estate market. I've said often that it is still possible to enjoy the benefits of home ownership even in these fluctuating markets and I've also suggested that buyers who are waiting on the sidelines trying to time the market can find that strategy may backfire. The point I continue to make is that if you are looking for a "home" and not just an investment, the time to buy is NOW. In this market where there is a high inventory of homes, there are deals to be made. But, please, don't be unrealistic about the depth of those discounts and don't underestimate the Seller's willingness to "tough it out." Sellers have to be realistic. This is NOT the market it was two years ago where a Seller could overprice a home and buyers would fall all over themselves to bid on the property, often with multiple offers on one property. While those days were exhilarating, they were really not "reasonable" and now we've all come back to earth to a "normalized" market. For some homeowners, the difficulty arises if they have to sell before any equity has been built up in the property. While this is unfortunate, if the homeowner "has" to sell (job relocation, divorce, interest rate re-sets, etc.), they must price the home to the market if they want to sell it quickly. If they try to price it higher in order to make a profit or break even, they will most likely lose more in the long run because today's buyers are very savvy and along with their Realtors, they do their research and they know what to pay.

Now, here is some housing news from last week. The Senate agreed in principle to a $15 billion housing stimulus package that could pass as early as this week. Some of the highlights:

• A property-tax deduction for homeowners who don't itemize.
• FHA insurance up to $550,000. $100 million for counseling borrowers on the verge of default.
• A tax credit for buyers of foreclosed homes.
• A law has been passed that extends until 2010 the tax deduction for mortgage insurance (MI) premiums. Borrowers with adjusted gross incomes of $100,000 or less can deduct 100% of these premiums. The deduction continues on a sliding scale up to $110,000. This legislation makes Mortgage Insurance another option for borrowers to consider in today's market.