When Will We Hit The Bottom?

When Will We Hit The Bottom?

Depsite the recent poistive news, this post originally published in May still is relevant.

It’s the question on the mind of every buyer, seller, broker, and banker.

The February 2009 Price Update by J.P. Morgan reported that the cumulative price decline of the nation’s housing market was 32 percent below its peak in July 2006. The same report opined that prices will drop another 20 percent by 2010 or 2011. Although some regions of the country are faring better than others, the total correction from peak to trough is expected to be down 45 percent.

While the statisticians and economists may debate the exact timing and size of the correction, I’d like to offer another perspective: “When will we hit bottom” is an irrelevant question.

This is not a callous observation, but a practical one that empowers you to meet the challenges of this moment. And the realities can be boiled down to a few simple observations:

Right now, the only person who comes out a winner in this environment is the buyer. Sellers, agents, and banks all face historic challenges: a huge backlog of inventory, falling prices, mortgage defaults, and on and on. It is a buyer’s market, obviously, and anyone looking to purchase holds all the cards.

So what do you do if you are on the other side of the transaction?

If you don’t have to sell right now, hold onto your property for the next two to three years. By then the market should have hit its bottom and stabilized.

If you have to sell now, here are a few tips:

  1. Get a savvy agent: Now more than ever, it is essential that you have an agent who knows how to navigate the difficult terrain confronting buyers and facilitate a sale. Two years ago, a broker could be an “order taker.” In this environment, you need a problem solver.
  1. Differentiate your property: Highlight any features and amenities that make your house unique and special. With a glut of properties on the market, this is essential.
  1. Show you are serious: Let buyers know you will accept a fair market price, and are willing to work with their banks, brokers, etc., to ensure an easy transaction.
  1. Hire a good attorney: A knowledgeable attorney can structure a contract on the front-end so that there is a smooth and successful outcome.

The luxury real estate market will eventually rebound. Try to follow these common-sense principles until then.