Real Estate 101 – Learn And Earn
Written By: Lee Amble, Realtor/Consultant
This article is somewhat of a rerun of an article I wrote in September 2007; the difference will be that it's mostly reversed from that year!
In order to help more people understand the state of affairs in our market, I will explain different types of markets, and, at the end of the article I will tell you about our current status of the market. In order for everyone to understand the three types of markets, please don't get bored as this is my Real Estate 101. It's very simple to many, but not to all.
A Buyer's Market is when the inventory is abundant, negotiation of price is more available as it puts sellers at a disadvantage because of the number of homes that are in competition with their home. Remember, when writing an offer, do not offer too low a price as the seller will no doubt ignore it and, rarely, would not give the buyers a second chance or a counter offer. It's important to save time and money by offering the best price you're willing to pay.
A Seller's Market is when a seller has the advantage, but, again, most sellers are also buyers so we just end up with a trade of dollars. This market is when there are less homes available for sale so that the buyer may pay more for the house because of the lack of homes that meet their needs.
An Equal/Neutral Market means there is no advantage for either buyer or seller, but a transition between a buyer's and/or a seller's market; in other words it's a stable market.
Over time, buyer and seller cycles usually last 5 to 7 years and a neutral market only a couple of years.
Most people do not realize there are 4 types of real estate markets, i.e.:
A national market is nationwide and gets the most press which really drives perception up and/or down.
A regional market to us would be the southwestern states i.e; Arizona, California, Nevada, New Mexico, Washington, Oregon and Colorado in our case. We do not get many sales from Utah. A close regional market, where most of our buyers come from, are all of Arizona and southern California.
A local market would be approximately 30 miles in all directions of Prescott.
A personal market is yours i.e., a subdivision, area of town or even a street. This market is really the most important one for you, the seller or the buyer. For sale signs or a lack there of, can really tell you a lot about your personal market plus how long the signs have been up.
Compared to many investments, housing carries three distinct values.
- Appreciation over time.
- Value of living in your investment.
- Personal tax shelters.
Your home is a long term investment. National prices of homes in 1910 were $3900, 1950's - $13,000, 1970's - $50,000, 1990's - $150,000, and the 2000's up to $300,000+. One hundred years time from $3000 to $300,000+ ; yes, a long term stable investment and a great place to live! Again, your home is a nice long term investment.
All housing sales in every area are economy based; high wages bring high housing costs i.e., San Francisco and New York, etc. Lower wages mean lower costs i.e., Oklahoma, Texas, Alabama, Missouri, etc. in the middle of the country. Both coasts bring high prices and the Midwest is generally lower.
The Prescott area housing market is better than many because of the greater number of retirees moving here than most areas. They normally have a steady income from their savings and various types of retirement income. Our area does not have any major industry, which helps prevent the fear of large job losses all at once. Medical, County, Government, Colleges, are some of our major job sources. They seem to have had a more or less steady growth over my 32 years of living here. We also are blessed with having some of the best overall weather in the nation, and, of course, good shopping, hospitals, doctors, education and much more. Oh! Did I forget Sam's, Costco, Trader Joes, Home Depot, Lowes and so much more?
Our local real estate market has gone through quite a price correction sin late 2005 and early 2006, but it is now over—thankfully! The correction was very severe with properties lowered from 45% to 60% in some areas. It is nice to know it's going the other way now and has been for at least 6 to 9 months. Overall, for many, it is not as bad as it seems as our prices about doubled between 2000 and 2005, but, remember, many were not that lucky.
Our local market and the national market are driven up or down by the news media, as we know perception is the new reality. Lately, the news has been more positive.
Always remember, real estate markets are driven from the bottom to the top and it's always a personal market that makes up our local and regional markets. Our lower priced market has been very active and is starting to move up in the next price categories, overall a very good seller's market.
Thank you for reading all my "Food for Thought" articles. If you have questions or ideas for future articles, please call or email me.
Please remember, "Selling A Home Is Easy, Doing It Right Is The Key!"
Lee Amble, Realtor/Consultant
National Realty of Prescott
Lee's cell: 928 533-4455
Jan's cell: 928 533-4488
P.S. Please reread the article from July 21st again titled: "Buyers/Sellers beware of Phone-Baloney Advertising" New ads are showing up that are just as bad or worse than previous ads. Beware of small hidden print, asterisks and come on 800 numbers. This applies to not only real estate, but many products.