People ask me all the time; How’s the real estate market? Of course there is a lot of different aspects of the real estate market but I think most people are asking; How are prices?
In researching home prices in Sacramento County from 1970 until present I discovered that the last run up of home prices from 2000 until almost 2006 was quite unprecedented. What I also discovered is that this most recent recovery starting in 2011 appears to have a similar footprint!
I don't believe the conditions are the same. For instance, I don't think there is mortgage fraud happening like it was during those years. it is actually quite difficult to get a loan nowadays because of all the documentation that is required. What is similar is, low interest rates. In fact interest rates are lower now than in 2005. Thats great if you are a home buyer but I question if we need the fed pumping 80 billion a month into the bond market to keep them artificially low. This is creating a "false market" or a "bubble" like the last bubble of 2005.
What can we all do to protect ourselves from the negative effects of declining home prices this time around?
1) Buy homes that we can truly afford. Don’t get an adjustable rate mortgage just to afford the new home.
2) Pay down our mortgages by paying just a little extra each month (it adds up!) One extra payment a year or 1/12 of an extra payment a month shaves 7 years off a 30 year mortgage and builds equity faster.
3) Don’t refinance to pull out cash for a new boat or car. I have spoken to so many people who told me, if I had only known. Well now we all know how bad it can get!!
It is a sellers market right now so if you are thinking of making a move in the Sacramento area, please call me. It’s a great time to do it. Especially with interest rates so low! I can coordinate the sale of your home and get you into a new home with one move. I do it all the time.