There Will Never Be a Perfect Market

Why is that negative news stories get the attention of consumers more easily than good news? The lead in may be good news (so we don't point that accusatory finger at the media), but it often has an immmediate little teaser that implies it may not REALLY be good news - and so our eyes or ears perk up to catch the other side of the story. For example, Data from MDA DataQuick showed that sales in the very hard-hit Phoenix area have surged 72% this year. MDA DataQuick was quick to note, though, that “for the foreseeable future, the Phoenix region will continue to have many foreclosures to recycle, and that inventory of lender-owned property will weigh on home prices.”

Other reports last week were similarly tempered. One economist stated after the good news on new-home sales and housing prices that “a glut of grossly overpriced homes currently on the market and the possibility of climbing mortgage rates are among several potential challenges facing the market.” That sentiment was repeated often.

News should be balanced; it's important to know the full story, because all markets offer the potential for risk, along with the potential for reward. But it's also worth remembering that there is no such thing as a “perfect market.” Home prices, mortgage rates, and the economy will never be “just right.” It's also worth remembering not to give one side of the argument more weight than it deserves.

In this market, too many potential home buyers are still allowing their fears to be fed by the "tempered" side of what really IS good news. More people are out looking for houses, prices have been stabilizing, more houses are being sold - all of this is good news for anyone interested in owning a home - it means the market is getting healty again and their investment should be a solid one. Many buyers who were looking for the great bargains to be found in short sales and foreclosed properties have found buying them is not as easy as they may have once thought. And, the time between making an offer and getting to the closing table can be extraordinarily long compared to what homebuyers in the past could count on, so interest rate locks expire or if you are "floating", interest rates can rise. Either can effect being approved for the loan amount needed for the purchase. The smart buyers are making the decision to go ahead and take advantage of a market with well priced homes; they find one they like, that they can afford, and that they can move into on a timetable that suits their life, and they are buying them! But, some people are STILL waiting for that perfect market - one in which they buy at the perfect time to get the perfect price and a loan with the perfect interest rate.  Unfortunately, perfection doesn't exist, which is why waiting for it guarantees missed opportunities.  One of those missed opportunites applies for buyers who qualify for the first time home buyers stimulus money (FYI-people who have not owned a home in the last 3 years qualify also), but wait too long to get started on the process of buying a home; the prices will definitely go up, by $8000, come Dec. 1. Now paying that kind of price for procrastination really hurts!