NAR: Media reports on housing market ‘irresponsible’
Real Estate Forum.BY JOYCE NENNINGER AND ALLISON SIMSONQuestion: Allison, there seems to be so much controversy about a “housing bubble.” What are Realtors saying about this situation?Answer: “Is there a housing bubble?” “When will it burst?” It’s no surprise that those are the most frequently asked questions of David Lereah, chief economist for the National Association of Realtors (NAR).Lereah told attendees of NAR’s Leadership Summit in Chicago last Friday that these questions are valid, but the answers provided by some national media outlets are not. “I see a healthy market with some growing pains, and they see a bubble about to burst,” he said of recent newspaper and magazine reports that predict a housing market bust. “They’re having, in my opinion, an inappropriate relationship with the facts.”Market in very good shapeA close look at housing statistics actually shows that the national market has strong fundamentals, with a lean supply of homes, a growing pool of homebuyers, an improving job market, and continued low interest rates, Lereah said.
However, he acknowledged that local markets differ. Some cities haven’t seen close to the double-digit annual price growth experienced in the hottest markets, while in other areas home prices have soared out of reach due to a supply-and-demand imbalance. In San Francisco, for example, the median price now exceeds $700,000. The widespread availability of specialty mortgages, such as ARMs, interest-only loans, and low-down payment mortgages, only compounds the problem in such pricey markets, Lereah said. Specialty mortgages can overstretch homebuyers’ credit, allowing them to buy a more expensive house than they really can afford and posing a higher risk of default. (To educate consumers on risky loans and abusive lending practices, NAR has released a new brochure in partnership with the Center for Responsible Lending titled “Shopping for a Mortgage? Do Your Homework First.”)But even in the most steamy of local housing markets, Lereah said there will be no bursting bubbles. Rather, the air will likely leak out gradually, returning prices to more normal market conditions.Ammunition for bubble questionsLereah knows that he isn’t the only one being bombarded with “bubble” questions. That’s why NAR’s Research Department has developed a tool to help local and state associations deal with queries from their members and the public, who may be looking for answers after reading negative news reports.NAR researchers have compiled individual metro-area market reports that will be mailed to every association in mid-September, with statistics on affordability, housing supply, and economic factors that reveal the boom isn’t about to end, Lereah said. The reports will come in an easy-to-understand format, complete with talking points association executives can use when dealing with reporters.The goal, Lereah said, is to show the public that the housing market is still going strong, despite the “irresponsible” news coverage about housing bubbles. “The good times are not turning bad,” Lereah said, predicting a healthy market through the remainder of the decade – as he did at last year’s summit. “I’ve got credibility on the line. If I think the market is going to turn sour, I’m going to say it.” Question: We want to buy a home here for a combination of reasons. One is for our vacation use and the other is because of the investment potential. We want to make sure that we make a good purchase – one that will be a good resale property. What is more important?
Answer: Homebuyers shouldn’t only search for a house that they can afford and like, they should also purchase one that has a strong resale potential. Both the interior and exterior elements of the property are important factors in resale considerations. But real estate professionals say that, when faced with a choice, buyers should regard the interior as more important than the exterior.The inside of a home is more important because the floor plan is extremely costly to change, while the exterior can be remodeled for less money. Furthermore, homeowners will spend more time inside the house than they will outside. By the same token, though, buyers shouldn’t purchase a home that’s so aesthetically unappealing that they can’t live with it. An unattractive paint job can be easily remedied – architectural mistakes can’t. After all, 30 percent of buyers who find a home ugly won’t venture inside.Homebuyers should also take into consideration the location of a property. Even if the home itself isn’t in the greatest shape, a highly desirable location can boost the resale value significantly. To get the best deal on the resale of a home, buyers need time on their side. Those buyers who can purchase a home and then wait for the value of the property to mature will ultimately reap the biggest benefit upon resale. Finally, to find the home that will make a good investment, buyers must be tenacious and ready to seize a lucrative opportunity when they find one.Question: Joyce, has there been any impact on interest rates by the hurricane?Answer: Interest on long-term mortgages rose for the first time in five weeks as a result of investor concern over whether the Federal Reserve will raise short-term rates for the 11th straight time next week or pause to further assess the impact of Hurricane Katrina on the economy. Rates on 30-year, fixed loans rose to 5.74 percent this week from 5.71 percent a week ago, according to Freddie Mac. “Mortgage rates were relatively unchanged this week as the markets wait for results of the upcoming Federal Reserve policy committee meeting,” says Frank Nothaft, the company’s chief economist. Also, rates on 15-year, fixed mortgages rose to 5.32 percent from 5.30 percent; initial interest on one-year, adjustable-rate mortgages (ARMs) rose to 4.46 percent from 4.45 percent; and five-year, hybrid ARMs inched up to 5.26 percent from 5.24 percent.
Question: We have just listed our home in Dillon. What can we expect in terms of advertising, showings, open houses, etc? Answer: Your home should be listed, whenever possible, in the local Multiple Listing Service and on http://www.Realtor.com, which has the largest online database of homes and virtually 100 percent of potential buyers who look for property on the Internet. In addition, your broker’s marketing efforts and considerations may additionally include advertising. The Realtor’s largest expense has traditionally been classified advertising in the local newspaper. However, today properties experience better exposure through popular Internet home search/listing services. Realtor.com provides the most listings of any online real estate site, with more than 1.25 million homes.Even with these additional advertising avenues, “For Sale” signs on the front lawn are still remarkably effective. Many Realtors use brochure boxes along with these signs to market the property. When appropriate, and with your permission, your agent may send a mailing about your property to neighbors. Sometimes one of them has “a friend or relative who always wanted to live near me.”In terms of showings, to prepare your home for viewing, make it as light, cheerful and serene as possible. Open heavy drapes, turn on lights in closets, basement, and attic, and turn on your dining room chandelier and living-room lamps. TIP: When preparing your home, think about the techniques that are used to show builders’ model homes.Your Realtor will probably find a tactful way to suggest that you not be present while the house is being shown to prospective buyers. This is done because your presence will inhibit their actions and conversations. They won’t feel free to open closets and cabinets, test out the plumbing, and discuss their observations objectively as they walk through. It goes without saying that your children and pets should not be on the premises either.If your Realtor has scheduled an open house, you may want to notify the neighbors, and assure them that they’ll be welcome. They’ll jump at the chance to poke around in your house, and sometimes they can turn up a buyer among their friends. In preparing for an open house, you should pull the drapes back, light lamps, simmer a few drops of vanilla on the stove, light your fireplace, set the dining room or kitchen table if you have particularly nice linen or china, put fresh towels in the bathroom; and then leave the house so your Realtor is free to deal with prospective buyers in a professional manner.For answers to your real estate questions, call JOYCE NENNINGER or ALLISON SIMSON at (970) 468-6800 or 1 (800) 262-8442. E-mail Info@Summit RealEstate.com or visit their website at http://www.SummitReal Estate.com. Allison and Joyce are both long-time locals in Summit County. Summit Real Estate – The Nenninger/ Simson Team is located in the Dillon Ridge Marketplace. Their long-time residency and years of real estate experience can help you make the most of any buying or selling situation. Both are Certified Residential Specialists (CRS), the highest designation awarded to a Realtor in the residential sales field. Their philosophy is simple, whether buying or selling, they understand that the most important real estate transaction is yours.
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