Is the Real Estate Market Booming or Falling? (Due Wed.)

In our household, where real estate is our business, the market is always good because no matter how bad or good the market may seem, we always make a profit. The majority of the real estate market is the process of selling or buying a property. In the past, the real estate market has never been stable. Either the economy was booming or failing. The prices of property have dropped, making the home sales reasonable for people who couldn’t afford a home earlier. Recently, it seems like the real estate market has started to increase in its value. In other words, the real estate economy has shown signs of rebounding from the “real estate crisis.” Although many people may assume the real estate economy is going through a tough time, recent studies show it is a great time to buy or even sell a home.

Although some may say the real estate market may not have a big role in the U.S. economy, it is quite the contrary. The real estate market makes ten percent of the entire U.S. economy. That is a big component of the U.S. financial system. In other words, if the real estate economy is booming, chances are that the U.S. financial system will do the same. Along with that, the real estate market will determine if some people have jobs or not. A lot of people’s lives depend on how the real estate market is working. The real estate economy is one of the most difficult things to analyze, because of all the factors and aspects people have to take a look at. However, there are experts who analyze and predict the future of the real estate economy. Some recent predictions show the real estate economy is going to either stabilize or decrease a little bit, which is not bad news for most Americans because of recent allegations that the economy may be going through a recession. This report showed a sign that eventually the real estate economy is going to be up and running like it was two years ago. In my past experience in the real estate economy, the real estate market has a cycle. This cycle consists of a “depression” mode as well. After looking at a few studies the typical trend shows that after five years of positive reception there is an average of two years of a downfall. This downfall enables many of the lower class people to afford a home. If this downfall never existed, the average American wouldn’t be able to afford the extremely high home prices. This two year period enables everyone to draw even and be active in the real estate market.

Currently, the housing prices are dropping significantly from the past year, and the interest rate seems to be lowering. It is written in an article from CNN.com “The report showed that the national median existing-home price for all housing types fell 6.3%.” Common sense would dictate that because of this the real estate market should be struggling drastically. However, that is terrific news to current home buyers. Buyers can now take advantage of affordable home prices at low interest rates. In the same article from CNN.com, Ben Rooney, who covers most of the money related stores for the news channel writes, “The number of existing homes sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April.” This is excellent news for the entire U.S. economy. Stephanie Armour, from USA Today writes, “Yet, what's bad for sellers is good for buyers — at least those blessed with excellent credit and enough money for a sizable down payment.” As of this time, anyone who has good credit and is looking for a house can get an excellent deal, which will save the buyer thousands of dollars. If I was a buyer, I would take advantage of these fabulous home prices and the interest rates. Also another trend that I am seeing is more Americans are willing to go and look for a new home. Although they may not buy anything, it keeps the market in better shape, because it shows investors that people are still looking around. These prices are only to stay low for a little time and it is an excellent opportunity for the low and middle class people to purchase a home. The time to buy a home couldn’t be better for most Americans.

Since the interest rates are lowering and the home prices are dropping, it may seem like this is a horrendous time to sell a home. The media is making it seem like the world has turned upside down. While it is true that the prices are falling, it does not necessarily mean that the economy is significantly struggling. My own experience with selling a home makes me believe that the prices have fallen but people are still making profit on houses, which is the main goal of a seller. I believe if the seller approaches the concept of selling a home by making a stellar presentation, developing a market plan and listing the house reasonably, it should sell quickly. On top of that, there are even some areas in the United States that haven’t really taken a big blow. Take Seattle for an instance, NWMLS, also known as Northwest Multiple Listing Service, have just released a new report this month. The report shows the housing market is becoming more balanced as the number of homes sold climb to the highest level in ten months. The prediction is that the percentages are going to increase, and the real estate economy has “recovered.” The major reason for this decline of home prices is the number of inventory in the market. As of right now, there are more houses for sale than buyers in a large number. This allows the seller to have the advantage rather than the other way around. Gradually, the inventory will reduce making the demand for houses greater. This is what happened four years ago, when the housing prices went ridiculously high, and is a basic example of "supply-and-demand." Home sellers have nothing to fear about and should be able to sell their home at a reasonable price if marketed correctly.

The real estate economy is a unique system. The standard way of thinking about the real estate market these days is that the economy is extremely fragile and risky; yet with great care there is, a financial reward at the end. People don’t realize how the media overemphasizes every little thing and makes it a huge deal. As of right now, potential buyers are realizing that and are taking advantage of the low home prices, and the sellers are happy with the sales. The bottom line is that if the market has home buyers and homes to sell, the economy is not going to go down drastically.

Works Cited

Amadeo, Kimberly. "Has Housing Bust Bottomed Out?" About. 26 Feb. 2008. 25 June 2008 .

Ben. "May 2008 NWMLS Housing Report." Seattle Housing Buzz. 5 June 2008. Housing Outlook. 25 June 2008 .

Bordo, Micheal D. "U.S. Housing Price Boom-Busts in Historical Perspective." Papers.SSRN. Oct. 2005. Harvard University - Department of Economics. 25 June 2008 .

Christie, Les. "Vulture Real Estate Investors Swoop In." CNN. 6 July 2008. 6 July 2008 .

Rooney, Ben. "Existing Home Sales Rise on Price Drop." CNN. 26 June 2008. 25 June 2008 .