I continue to be bothered by the constant negative news. I stopped watching all news broadcasts several months ago. Here’s the hard truth. Bad stuff is considered news and people listen. It’s an unfortunate fact of life. But in the Middle TN market, the news isn’t that grim. Here is my perspective from the Middle Tennessee market area.
First of all, please remember that when you are watching a national news broadcast, it is written to a national audience and therefore is not specific to a market area. Location, location, location… have you heard that expression before? Your local market may be better or worse than the markets that are being discussed nationally.
In Middle Tennessee, I believe we have seen the bottom and are skating across it. We have seen a massive decrease in inventory which is making for a healthier market. Home values have stabilized if for no other reason than supply and demand. Lenders are lending to those with 620 credit scores or higher and there are still programs that allow buyers to get in for little or no money such as VA, THDA, and RD (If you don’t know what those are, call me or your real estate professional).
Appraisals continue to be a problem due to so many distress sales that affect values. Sellers tend to be of the opinion that they will not sell because they can’t get what they want for their house. If they think the process through, they will see that there is a huge win at the end. If they have to take less, the likelihood is that the person they buy from will as well. So that creates a wash. So where is the win? In the interest rates!
Right now, mortgage rates are off-the-charts low… In 1980, mortgage rates were 15%. In 1990 (when I became a Realtor), they were 10%. In 2000, they were 8%. Today, they are BELOW 4%. It is the greatest deal in U.S. history!! We may never see a buying opportunity like this again! Fortunately, current indicators lead me to believe that rates will remain low in 2012. Historically, interest rates are low in years of Presidential elections.
We need to understand that people don’t buy homes based on the price of the house relative to their income. People buy homes based on the mortgage payment of that house, relative to their incomes. Opportunity is knocking for home owners and is yelling from the tops of mountains for investors!
2011 has seen a continual flow of distressed properties. I expect more of the same in 2012. Bank, VA, and FHA foreclosures offer great opportunities. Investors can purchase rental property as well as flip properties and can make a good living doing it.
Positive signs are coming from the job market, Nissan related contractors have been hiring, Amazon is bringing business here, Bridgestone, Rich Food Products and the like like continue to add stability in the local economy.
I live near a very nice shopping center that has many dining and shopping choices. Those businesses are full nearly every day, especially on weekends. People have finally accepted that the economy we live in is the new norm and have adjusted their spending habits accordingly. The last thing people are willing to give up is their life style and the local style is to enjoy the fruits of their labor by dining out and shopping for loved one’s at Christmas.
The commercial market always follows the residential by a few months. With that said, I believe the commercial market is finally hitting bottom and will be on it’s path to recovery in 2012. I do not see the plethera of small businesses leasing space like we saw for so many years. Large users have consolidated space and are now poised for the next level of growth. They maximized their space and have pushed themselves as far to the walls as they can. It’s time to shift gears and expand.
In conclusion, don’t be the guy that looks back and says “I should have taken advantage of the great real estate opportunities in 2011 and 2012″. Your financial future depends on your ability to see opportunity and embrace it. A better financial life awaits for those willing to read this and act on it.
Red Realty is embracing the market and making lemonade from lemons. Check us out at www.RedRealty.com
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