What is Wrong With the Real Estate Market?

By having my ear to the ground and looking at the current stats, the market is slow in many areas of Kentucky. Yes, there are pockets out there that are still doing relatively well (not what it once was, but still producing sales).

People are asking what is wrong? I would say that there are many factors that I see that is affecting the housing sales.

First, many are saying, "the rates have crept up too high," funny they are still at their historical lows. I recall Mr. Cavuto on Fox News saying when he was in his younger years, he bought a home with the interest rate of 13% and he was grateful to even get that. I myself bought my first home in 1996 and my mortgage rate was 6.5%. I thought I was the King of World. Right now, a VA loan is going for 6.625% to 6.75%. What is wrong with people? There is absolutely no excuse with the rates.

Then you are facing the inflated home prices that have went up dramatically over the years, while at the same time average family incomes have not increased at the same speed. Yes, we must keep in mind, Kentucky has not inflated in prices as dramatic as in many other areas of the country. So essentially, when people see what they can get with their money it just doesn't add up. We are seeing homes in the low $100k down to $80k (please remember, this is smaller Kentucky communities) have many issues with these homes or they are to small and can't necessarily fit a family of 4 in it.

So, what must happen in this case you might ask? Either America is going to have to be willing to do one of the 5: go smaller and accept it; cough up the extra money in a monthly payment (if the money is there); wait for the market to correct itself (home prices to fall slightly, in our marketplace); average family income rises; or the family's income rises by default (because there is an income change within the home for the better).

In my next posting, I plan on discussing what did the subprime mortgage market do to the real estate market? What must the real estate professionals do to keep their head afloat and push the head of their competitor down to drown?

Published by: Shawn D. Paul, Founders Lending Co. Loans for Life

HomeEzSearch

Real Estate in Kentucky