Mood of the Market
Mood of the Market
In the last couple of weeks, all of these real estate headlines made the news: home values are up and listings are selling like hotcakes in Silicon Valley; the real estate market has double-dipped, with prices falling below their 2009 trough; 90 percent of Americans think homeownership is still part of the American Dream; and home sales nationwide were up in May.
Neither the two- to three-minute span of a broadcast news segment nor the 800-word limit of a newspaper story allow for a much more nuanced or comprehensive story than one that covers one of these single points.
The problem is that individual consumers like you and me gobble these stories up in an effort to educate ourselves and make proactive, informed decisions about our own homes and mortgages. And the media fire hose of all of these stories look at the national market from 20,000 feet but do little or nothing to answer the actual questions we have.
And they do nothing to help us move forward in making the decisions we actually have to make: Is the market good or bad? And what does this mean for me? Should I buy, sell, refinance or walk away?
Some of the questions I am most frequently asked arise from the confusion and overwhelm that buyers, sellers and homeowners experience when they try to make sense of these stories and derive from them some direction for their personal real estate decisions.
It is important to stay on top of the news, but many consumers get upset once they start actually moving forward on their action plans and realize that the national news doesn't apply to their particular town or decision.
So, it occurred to me that it might be time for a simple rule of thumb for what information sources smart consumers should look to and when.
The time to look to the macro -- to the national news and data reports -- is always, even when you don't really have any real estate decisions pending.
But look to them for very basic education about what's going on in the market, like the national lending climate (i.e., whether loans are easy or hard to qualify for, etc.) and what I call basic research and development: the extremely early-phase research and development of your own homebuying, selling or other real estate decision-making.
The national real estate news can do a good job of inspiring you with questions to research and ask of your personal mortgage professional and your local real estate broker or agent -- before and throughout your actual process of buying, selling, refinancing or even formulating your response to a personal mortgage crisis.
One other thing the national real estate data reports and stories can be uniquely helpful with is the comparison of different regions' real estate markets.
For example, if you're thinking of buying a home in New York state or Utah, there are some valuable insights you can glean about the economies and market dynamics of those areas, relative to each other, from looking at some of the data indices that report on a large list of cities you could not get from a local broker in either area.
But when it's time for you to move out of research and development and start planning -- and taking -- action toward your real estate goals, you need to quickly shift your information sources from national to local, and from general news reports to professional advisers who can give you personalized advice.
When it comes time to decide whether to rent or buy, whether to select a particular neighborhood, home or mortgage, or how much to offer for a home or when to lock your interest rate, you need to be talking with a local real estate broker or agent and a local mortgage broker -- or two or three -- and maybe even a financial planner or your tax adviser.
These decisions should be made based on nuanced information about your life, your finances and your area.
If you're upside-down and read something that makes you think you should short-sell it or even strategically default on your mortgage and let it go to foreclosure, talk with your real estate broker, mortgage broker and even a local real estate attorney to fully understand what legal, credit and financial implications would be in store for you, with your assets and liabilities, in your state, with your mortgage -- not the guy in the article you read.
If you think you might benefit from refinancing or want to put an action plan together for qualifying for the best home loan when you buy next year, it's fine to read some articles about mortgages to start your do-it-yourself research efforts, but before you start paying off bills or figure you're finished saving up for your down payment -- even before you mentally disqualify yourself, thinking you'll never get a loan -- get referrals from your friends and family members to a local mortgage pro.
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