Definition of “Normal” in Real Estate

Defining "Normal" as it relates to Real Estate means what is happening today in the Real Estate market.  Real estate markets shift constantly.  Anything can affect how the market performs.  If inventory is high and is defined as a "Buyers Market" than there will be pressure on sellers to stay competitive.  If inventory is low and is leaning in the Seller's favor, than Buyers will find prices climbing in response to lower inventory numbers.  Stock market shifts, economic numbers, employment numbers, even election years can change how the Real Estate Market behaves. 

Historically, markets tend to run in about ten year cycles.  For example, in the 80's, interest rates were in the mid to high teens.  In the 90’s, interest rates were in the 9 to 13% range and most people were using FHA or VA Loans to buy homes.  Conventional loans were not practical because of high down payment requirements combined with still fairly high interest rates.  Then came the 2000's where we saw the biggest gains and losses in a Real Estate market, ever!   In that short four year time span, prices climbed to record highs and then plummeted to record lows.  It has been a slow road coming back from those days.  That has left both buyers and sellers a little wary of the market.    

Prices are climbing again in response to lower than normal inventories.  Foreclosures and short sales are nearly gone, and the few that do hit the market are coming out either close to normal market pricing or are priced low because of poor condition.  It has been a long ten years for consumers and agents alike.  Those that took a hit on their homes are finally ready to buy again but are finding affordable housing a challenge.  Agents who survived the downturn are struggling to get listings because people who might otherwise be interested in selling are reluctant to do so because finding a replacement home at an affordable price is a challenge.   

Buyers are still recovering financially from the economic woes of the past and affordability is a huge factor in the market.  Buyers want to buy, but the same issue arises for buyers, affordable homes are scarce and prices have increased again quickly.  While sellers are thrilled with the price gains because they are seeing a return of equity they lost in the downturn.  Buyers are frustrated though because finding a home they feel is affordable and in good condition is a challenge.  

Lending guidelines have changed too.  No longer is money easy to acquire.  Not only are lenders scrutinizing the buyers closely, the home they are lending against is an important factor too.  This is particularly true with Government backed loans such as FHA, VA, & USDA.     

Both Buyers and Sellers need to understand that markets do not stay constant.  I
f you are buying or selling, your best asset is an experienced Real Estate Agent or Broker who knows the market and can help you negotiate the hurdles in a constantly changing market.     

Sandra Paulow, Associate Broker, GRI, REALTOR®  928.242.0300

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