Great Question! The truth is this is a challenging time for the local market! We are certainly in a buyer’s market, where prices are heading downward, but what caused it to shift so suddenly? The biggest factor has been the rise and fall of sub-prime mortgages.
You have to admit, it sounded a little crazy when banks, who are notoriously conservative, decided to offer 100% financing. And it sounded even stranger when banks decided to offer “no qual” loans, where they said they weren’t going to verify if the borrower made enough money to make the necessary payments on the loan!
So, what exactly were they thinking when they decided to combine the two, offering 100% financed, “no qual” loans??? Hello??? Who’s the rocket scientist that came up with that one? It’s no wonder so many of those loans are heading into foreclosure!
Creating buyers out of so many people who really weren’t “qualified” brought too many buyers into the market place, artificially driving prices up. And now that those loans are no longer being offered, prices are coming back down. What else is contributing? How about an economy heading into (or already in) recession? How about local companies announcing layoffs and downsizing, causing buyers to lose confidence? How about increasing inventory? Add it all up, and you have today’s “softening” market, where prices are falling. However, it’s also creating opportunity to buy at very low prices!!!