Everyone knows that Real Estate values are in the dumps right now. Like all things, nothing lasts forever. Real Estate values have always increased over the long term and they will again. What you need to remember about Real Estate is that it's a long term investment not a get rich quick scheme. Some people seem to have lost sight of this in the midst of a once in a lifetime spike in Real Estate values from 2003 - 2007. Now everyone is down on Real Estate and all the talk you here is how bad it is but the truth is in the facts and the facts tell a different story. Yes, your value is not what it was in 2007 but it's still much more then it was in 2000 and that's a fact! So when will those who bought at the top stop drowning from being under water? The answer is not a definite but it appears that hear in Richmond Virginia the answer may start with the date 2013. This is when I expect the values in our area to begin to rise again. Until then I expect mainly a sideways trend but a dip here and there is still possible. So why do I say 2013? Look at the facts, add a few assumptions, and you have good idea of what's going to play out. If you did this back in 2005 you would have clearly began to see the signs that a collapse was imenent. Then you might not have bought that overpriced house!
We have a good amount of foreclosures and short sales on the market today. This is the key to the fall and it's the key to the future rise as well. These short sales and foreclosures will not last forever. The only reason so many of them are on the market now is because lenders were encouraged to give away money to unqualified borrowers and as a result these borrowers defaulted on their loans. Am I Surprised? Not exactly! However, for the last 3 years lenders have been very strict on who they lend to which means you will soon have very few defaults and the existing flood of foreclosures and short sales will dry up. This will happen faster then you think. As soon as it appears these foreclosures are drying up the BUYERS will come out of the wood works. People like to follow the leader so once the buying begins it will snowball. They key is this, while people have been buying foreclosures and short sales they have NOT been buying new construction. As a results builders have come to a stand still on construction projects. Once the foreclosures and short sales dry up people will find that there is a lack of inventory due to stalled building projects. This will lead to a 1 MILLION HOME SHORTAGE in the Richmond Metro area! Believe it. It's true. You always have to focus on the future because the present is a result of the past and the future a result of the present. Presently we have the lowest interest rates in over 40 years combined with extremely low home values and lenders who are loosening their purse strings a bit. Not so loose that we get back in the same situation all over again but loose enough to qualify worthy borrowers. The only thing holding back the Real Estate market is the economy and high inventory. The economy is in recovery and the foreclosures and short sales are expected to dry up over the next 12-18 months. This combined with the assumption that interest rates stay low will lead to a nice reversal in Real Estate trends in the Richmond area and Nation wide by 2013. That's what the facts tell say but keep in mind the facts change daily.
Visit http://www.leenewcomb.lnf.com/ for more Real Estate related information and to view listings in the Richmond Virginia area.
"And that's my opinion, what's yours?"
Lee Newcomb
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