When is the recovery coming? When is real estate going to bounce back? When will the housing market get back on its feet? I hear these questions every day. If you’re waiting for the same grossly inflated prices and come-one-come-all, anything-goes lending practices we saw before the crash, I’d suggest investing in a time machine to take you back to 2007. But if your idea of a recovery is steadily increasing home values, robust sales, and stable, worthwhile investment opportunities, then just look out your window.
Bolstered by the strong rental market, sales are finally beginning to make a noticeable comeback. Across the country, lenders are seeing higher numbers of mortgage applications, and sellers are reporting multiple bids on their properties.
Here in NYC, where prices had continued to decline after most other cities had already hit bottom, home values start to jump back up in 2012, taking sale prices along with them. 2012 was the biggest year for home sales in NYC since the recession began, with buyers spending $30.3 billion throughout the five boroughs, according to the Real Estate Board of New York.
As we delve into 2013, there are two big challenges still facing the NYC market. The first is a lack of inventory. Some people worry that prices are only rising because the relatively low supply is driving up demand. But the inventory that’s out there is being offered at fair prices by serious sellers. These aren’t the wildly overblown prices of 2007, nor are they the desperately low prices being offered by homeowners afraid of defaulting on their mortgages. These are the reasonable prices that come with consumers slowly but surely regaining their confidence in the economy as a whole. As that confidence spreads, inventory will grow organically.
The second challenge is that mortgage lenders are still being overly conservative. Interest rates are low, but getting approved remains difficult. Fortunately, Washington is renewing its pressure on the biggest lenders to ease up, and many banks are beginning to offer educational courses for prospective homeowners in an attempt to demystify the mortgage process.
If you’re serious about buying, this is a great time to do it. You just need to manage your expectations. Your options may be limited – but that doesn’t mean your perfect place isn’t out there. Lenders may be difficult, but you can meet them halfway. Remember, they’re not there to do you a favor; they’re making an investment. Consider a multi-family property that could take advantage of the booming rental market. Or consider how to make yourself a better bet, like using credit restoration services if your credit is less than perfect.
Above all, bear in mind that the recovery is only just beginning. It will happen slowly. The days of buying properties and flipping them for an instant profit are still a long way off. But the days of being able to be confident in real estate as a long-term investment – they’re back, and only getting better.