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Waiting for the bottom of the market? Quit waiting and start buying

When I ask, "How's business?," many of the realtors I work with have been reporting the same thing. They have potential buyers to whom they have been showing properties but their prospects are afraid to submit offers because they're afraid of missing the absolute bottom of the real estate market. The truth is that nobody will know when the market has hit bottom until AFTER prices and sales have started to climb back up.

It is the nature of these statistics that it is impossible to pronounce the bottom of any market -- real estate, stocks, bonds, etc. -- until the statisticians are looking in their rear-view mirror. Having said that, however, we need to discuss whether or not the current market presents a buying opportunity.

We say that we are in a "Buyers' Market" when the supply of properties exceeds the demand. Clearly, the fact that inventories have swollen over the past year would support the fact that it is a great time to be a buyer. On top of that, this basic law of supply and demand has put some downward pressure on the prices of properties in our market.

Since most buyers understand the benefits of leverage, we need to consider whether financing is readily available at attractive rates. Despite what you may hear or read, there is plenty of money available to qualified buyers. In order to qualify, a buyer needs to be able to put down a small down payment, 3 to 5 percent, and have a reasonably good credit history. For the majority of potential buyers, this should not pose an insurmountable obstacle. If you are uncertain about your ability to qualify for a home loan, the first step should to consult your mortgage professional and ask to be preapproved for a mortgage. This exercise is critical so you know what your budget is so you can work productively with your real estate agent to find the best property for your needs in your price range.

Nobody has a crystal ball to tell us the future of mortgage interest rates. However, it appears likely that the Federal Reserve has ended its spree of reducing the Fed Funds rate and will be forced to control inflation by raising short-term rates.

We don't need to consult an army of economists to appreciate that inflation has become a real concern for the American economy. Just visit your local gas station or grocery store and you will experience the sticker shock on your own. What you need to understand is that fears about inflation usually are reflected in higher interest rates on mortgages. If the Fed starts to raise short-term interest rates in an effort to control inflation, it is likely that mortgage rates will experience a short-term improvement and then go up.

If you consider how the very wealthy have gotten that way over the years, an investment in real estate in certainly at the top of the list. To be sure, the adage of "Buy low. Sell high" still applies to the real estate market. What better time to buy than now when others are sitting greedily on the sidelines waiting for a magic moment to make an offer? When the media starts announcing that the market has turned around, it will be too late for those of you who are intent on investing at the bottom of the market.

Just as with stock investments, it is important to examine the fundamentals of the local real estate market and analyze whether or not property will hold its value or better yet, go up in value, over the coming years. Let's take a look at the general national demographics. The population in the United States tends to migrate South from the former industrial (and cold!) states up North.

The Baby Boomers, which still comprise the largest single segment of the population, are nearing the end of their careers. They are moving South in search of warmer climates and towns that offer a great lifestyle for their retirement such as coastal towns that have an attractive tax structure, restaurants, the arts and natural beauty. Further, these retirees are redefining retirement to include more active lifestyles. So locations that offer golf, tennis, fishing and boating are destinations that will continue to attract these folks. When you consider that the price of achieving these retirement dreams in Beaufort is still affordable comparitively speaking, now is a great time to buy.

The real money is made at times like this when the "herd" is mired in indecision.

Rebecca W. Bass is the branch manager of Sunshine Mortgage Corp. in Beaufort. If you have any questions about real estate financing, email her at rwbass@embarqmail.com and she will publish answers to frequently-asked questions in future columns. She can also be reached at 843-524-3100.