Sellers Starting to Sweat
The Contra Costa Times picked up a good Washington Post article:
"In many areas of the country, homes are staying on the market much longer than in recent years. Home prices are coming down or aren't rising at paces that would make one's pacemaker falter."
"I have a dear friend who recently put her townhouse on the market. It's a lovely home -- but my friend is worried because the house hasn't sold. It's been on the market for about eight weeks."
"We waited too long," my friend lamented. "Back in the day, three to four months on the market wouldn't be a big deal. It's just that the market was so fast recently that it seems so slow now."
"As the weather warms around the country and the high season for home selling begins, I know a lot of other people with homes to sell will be sweating like my friend."
"So is the housing market bursting its bubble?"
"Consider this: Mortgage interest rates have been climbing. In early March, the average contract rate for 30-year fixed mortgages increased to 6.42 percent, the highest level since July 2002, when rates averaged 6.46 percent, according to the Mortgage Bankers Association."
"If you're not sure what to do in this real estate market, I suggest you pick up the Color of Money Book Club selection for April. I'm recommending "House Poor: Pumped-Up Prices, Rising Rates, and Mortgages on Steroids" (Collins, $21.95) by June Fletcher."
'"It all seems so unstable, even experienced real estate investors are becoming nervous," writes Fletcher. "We are right to be worried. Though housing has been the engine driving the economy since the beginning of this decade, it could also slam on the brakes."'
"Fletcher, a reporter for the Wall Street Journal, has been writing about real estate and home-related issues for more than 20 years. She also writes the weekly House Talk column for http://www.realestatejournal.com/, the Journal's online real estate section."
"I've been looking for a real estate book to recommend for a while now. But too many are written by folks who are so tied to the industry they can't be objective, or they overly promote (recklessly in some cases) the prospect of anyone and everyone getting Bill Gates-rich buying and selling real estate."
'"House Poor" is different. In fact, on the cover of the book Fletcher promises tips to "survive the coming housing crisis."'
"Her advice is sound and reasonable."
'"But to every thing there is a time and a season, and that's as true for home buying as it is for everything else," Fletcher says. "The people who win big in the real estate game are the ones with the courage to sit out the manias as the markets reach their peaks and buy during the busts."'
"The real issue isn't if you will be stuck being a renter all your life, she says. It's whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."
"One of the best neutral calculators on whether it's best to rent or own can be found at http://www.mtgprofessor.com/, Fletcher advises."
"The site is run by Jack Guttentag, professor emeritus of finance at the University of Pennsylvania's Wharton School."
"We all need some perspective when it comes to the home we own or dream of owning. Unfortunately, many people see a home as their financial salvation, Fletcher concludes in her epilogue."
'"Our home's address isn't Easy Street," she writes. "It's simply a place to live, and a solid investment over time -- if we can afford it, don't overpay, make smart improvements and don't get caught up in risky financing schemes."'