Our Local Residential Real Estate Market - 6/28/10

By Barry Boccasile, Director of Growth & Development, Park Square Realty

 

Our Local Residential Real Estate Market -     6/28/10

I’ve been personally involved in the Westfield, Southwick, Agawam/FH and West Springfield (Quadrant) real estate market for the past 24 years. During my career, I’ve been a Buyer, Seller, Salesperson, Manager, Broker and sometimes even a Counselor/Advisor.

I experienced the market peak in the later 80’s, the downward “slow” slide in the 90’s, the recent 2005 market peak and also the latest downward “quick” slide.  In other words, the market has been up and down twice in the 24 years that I’ve been paying attention.

Over the past several months, I have received more calls and questions regarding the local market than I’ve ever experienced in my career. Basically, the public wants to know exactly what is going on. The questions vary depending on the person calling. The BUYER asks “When will the bottom come?” or “Will the interest rates go any lower?” (Because they want to buy at exactly the right moment). The SELLER asks “When will the prices start climbing again?”(Because they would like to realize more profit on their home). The REALTORS wonder, “How do I answer all of these questions?” (Because they do not have a crystal ball)

Many of these questions do not have the perfect answer, but I will stick my neck out and give you some of my predictions based on observations, statistics and my own personal experience. My intention is to give you some food for thought and then perhaps you can formulate some your own answers. Of course, by extending my neck, I’m certain that I will hear from some of our local real estate enthusiasts and experts, but at the moment I’m the person doing the writing here and I feel confident enough to share some of my thoughts and opinions.

The local and national real estate markets are directly affected by many variables, but I believe the #1 variable is CONSUMER CONFIDENCE. When people are worried about jobs and money, they’re not thinking about buying or selling a home, unless they absolutely have to. But, believe it or not, there is some good news! Consumers are a little more confident than they were just a few months ago. National statistics say that the purchases of consumer goods are up (which basically means, people are starting to buy things). Statistics also say that the jobless rate is slowing. (It has certainly not stopped, but at least it’s slowing down). Also, millions of people nationwide who were sitting on the sidelines have been motivated into buying due to the tax credit benefits, lower home prices and the record low lending rates. So, it seems that the ball is now rolling and CONSUMER CONFIDENCE is making a move in the right direction.

Regarding REAL ESTATE SALES. Places like California and Florida, which were two of the areas hardest hit by the real estate crash are now reporting better sales news. In our local area, condo sales and upper end properties have been one of the slowest market segments and just recently, condo sales are picking up and the upper end homes are starting to get more buyer attention. Note: When the slower parts of any market start to pick up, it’s a very positive indicator. I’m observing that sales agents in our offices are getting noticeably busier and I’m also hearing “things are busy” from other agents in our local market area.

Another factor that has a major affect on home sales and home prices in our area is SUPPLY & DEMAND (Basic Inventory). At the time of this writing (end of June) there is not a huge inventory of competitively priced homes on the market in our Westfield, Southwick, Agawam / FH & West Springfield Quadrant. Because of the lower inventory, when a well priced listing pops on the market, it sells quickly.

One more point regarding the “REAL ESTATE CRASH”.  Our area was not hit nearly as hard as other parts of the state and country. The good news for us is – As things rebound everywhere else, we will also experience a very positive benefit.

This is just my opinion, but I must mention the MEDIA. A few short years ago, when the real estate market (and economy) started to decline a bit, the national and local media got hold of the news and with their perpetual “gloom and doom” broadcasting they helped to push the consumer confidence snowball down the big steep hill very quickly. The public believes much of what it hears and it was hearing constant bad news for an extended period of time. The good news is that hopefully, the same MEDIA, which helped to make this situation worse, will now help to it better. Once the national and local media collects some positive news and starts announcing “the bottom has passed” and “the market is picking up”, the public will react and things will change dramatically. At this point, I would think that even the media might be sick of bad news. Bad news is getting old, so hopefully they will now be looking for any morsel of good news to announce and of course, every network will want to be the first.

Once the good news starts, another huge factor affecting the real estate market will kick in. HUMAN NATURE.  All of the many buyers who are waiting for the “very bottom” in order to get the best bargain will be dealing with a very strong emotion.. FEAR of LOSS. These buyers will now have to move quickly in order to purchase their home before prices and interest rates go up. They will not want to miss the opportunity.

As the many buyers purchase homes, the SUPPLY & DEMAND factor will show itself even more. The inventory will go down and the demand will go up along with the home prices.

So my answers are – We need to pay attention because the market is already subtly changing.

If you’re thinking about BUYING, now is a good time because home prices are at or very close to the bottom and interest rates are at all-time record lows today.

If you’re thinking about STAYING in your home and refinancing - Now is a great time to refinance (only if your planning to stay for a while) because again, interest rates are at record lows and you could dramatically lower your monthly payment.

If you’re thinking about UPGRADING to a bigger or better home, there has never been a better time. You might feel that you are losing a bit on the sale of your home, but you will greatly make up for it on the purchase of your upgrade and you’ll also have the advantage of great interest rates on your new purchase. It’s a total WIN-WIN.

So, there you have it. Our local market goes down, up and down and up and on and on.  

But, it’s not all gloom and doom.     It’s what you make of it!

By Barry Boccasile, Director of Growth & Development, Park Square Realty