The Bay Area president of Coldwell Banker, Avram Goldman, has discounted the current national media frenzy over the cooling of the once red-hot real estate market, saying that the market today offers a number of different and unique opportunities.
“Itís hard to go a day without some news story suggesting the ‘bubble has burst,’ or the sky is falling, or something equally catastrophic,” Goldman said. “But whatís missing in the avalanche of news coverage is the fact that while home sales have indeed slowed down, this current housing market offers a unique window of opportunity for savvy buyers and sellers to profit.”
For the first time, Goldman pointed out, “the stars are all in alignment for consumers: mortgage interest rates are near their all-time low, prices have stabilized, thereís a large selection of homes to pick from and yet the prospects for long-term gains in the market remain strong.”
“Certainly, it makes a more exciting news story to dwell on the negative,” he added, “but for smart consumers, it is definitely more economically advantageous to seize opportunities as they present themselves. And this market does indeed offer some of these opportunities.”
According to Goldman, those who can benefit from the current market are:
* First-time buyers trying to break into the market;
* Existing homeowners looking for a new home;
* Consumers looking to profit from investment property;
* People planning for retirement; and
* Almost anyone looking to increase net worth.
Goldman said that for the first-time buyers who have been patiently sitting on the sidelines during what has clearly been a sellerís market, they couldnít find a better time to get into the game. Prices have adjusted and stabilized as mortgage rates still remain historically low. Add a good supply of homes to that and first-time buyers have a window of opportunity that is seldom seen. And, with rents going up, first-time buyers may now pay little more for a mortgage payment than they do for an apartment, considering tax advantages.
“Because the pendulum has swung in favor of buyers, weíre seeing more sellers offering concessions than weíve had in years,” Goldman said. “Itís not uncommon for homeowners to credit dollars to buyerís closing costs. In other instances, sellers are offering to “buy down” the interest rate for buyers to make their home listing more attractive.”
“The point is that there may never be a more affordable time to buy a home than now,” Goldman explained. “If you wait for prices to fall, you could be in for a rude awakening. Itís a very rare year when the median sale price actually dips in California. Markets do cycle. Yes, we are now in a period of adjustment. Given still good demand, no one knows when the market will begin to reverse itself.
For investors, now may also be a good time to buy into the market, the Coldwell Banker executive pointed out. Those interested in building wealth may find some advantageous sale prices on real estate.
“There is an old expression that you build your equity on the buy side,” he said. “Savvy investors will buy now and then trade up when they can get a higher rate of return somewhere else. Real estate investors also understand that leveraging can earn them greater returns than they can get with other investments. If a $750,000 property increases 10 percent in value, or $75,000, that actually equates to a 50 percent return on an investment if buyers put $150,000 or 20 percent down.
Those looking toward retirement in the next decade will do well to plan on buying now, Goldman added.
“By owning real estate as part of your retirement portfolio, most of your retirement can be funded by others,” he said. “The tenant, tax advantages and appreciation over time can fund quite a nest egg. When you do cash out, capital gains rules offer a much lower tax rate than the tax youíll pay on your other retirement accounts. With proper planning, investing in real estate can be extremely effective way to fund your retirement.”
“So, despite reports to the contrary, the sky isnít falling in on this market,” said Goldman. “It certainly has cooled off from the last two years, but those were record-setting years. Weíre back to a normalized market. It has just been a while since we have been there.”
Goldman is president and chief operating officer of Coldwell Banker Residential Brokerage in the San Francisco Bay Region, the areaís largest real estate brokerage. The firm’s Pleasanton office is at 5980 Stoneridge Dr.
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