The new real estate market problem?… Prices Rise!
I looked thru several papers and websites today about the real estate market and overall people seem upbeat about where the real estate market is heading. Many experts guesstimate that we may have reached some kind of “bottom” of the real estate declining markets and they feel that prices should start to rise. I originally looked at this and thought “wow” that is great. When these prices start to rise then the market will recover quickly as more and more people start to jump in and buy houses.
After giving this some thought, I realized another potential problem waiting to happen. When prices begin to rise, the banks will take notice, they will say to themselves now is the time to get rid of the properties that we are holding because the property values are increasing. You see the banks are holding a very large inventory of houses that they have taken back in foreclosure. The banks have not put these properties on the market because they don’t want to flood the market and cause prices to drop down even lower. However, if the market starts to increase, then the banks will be forced to push these houses onto the market because they want to get more money for these properties. The banks will not be able to hold their properties off the market because like any other investor, they fear that prices will drop again and they want to get rid of the stuff they have.
Therefore, this process will flood the market with properties and more than likely cause the property prices to head back down because inventory will outpace demand. Add this to the fact that the banks have settled the robo-signing lawsuit and will start foreclosing on properties again in full force, which will increase their inventories even more, and you have reason to be concerned.
If you are a homeowner and you are considering selling your home than my suggestion is to sell at a price that places you ahead of the market or to consider selling your home with creative financing to give yourself the best chance of a fast sale.
Until next week…
