Despite their protestations

It is the nature of communication by those in positions of power, to put a happy spin on things.

  • This is the best time to buy because the prices are going down.
  • This is the best time to buy because interest rates will go up.
  • This is the best time to buy because the inventory of available real estate is at a high.

And today I saw the result of that good news.  April pending sales (those under contract but not yet sold) is down 26.5% from April of 2010.  Oops.  I don’t put a lot of stock in pending sales anyway; a lot of those are short sale offers which will fall out before the closing, but as the industry tends to look at pending as an indicator of potential buyers in the market, this is a hideous sign.

So why the steep drop off and what does it tell us?

First, there are a lot of people with ugly credit.  The number of times people will ask me to start looking for them, while they clean up that one last little bit of blot on their record is amazing.

The banks are not lending unless you’re squeaky clean or moderately clean with a huge downpayment.  If you’re not in the higher ranges of the FICO score, plan on 15-25% before they’ll stop laughing and trying to take back the complimentary pen they proffered a few moments previously.

There is no longer a rush to real estate as a “everyone does it and it’s the best thing to do.”  As neighbors watch their neighbors lose their homes, as happened to us this past week, the security of homeownership has mentally transfigured into an ugly uncertainty which can sink your financial stability.  More and more, we are seeing people opt for tenancy until the perception of stability has occurred.

What does that mean for the prospective homeowner or investor?

  • This is the best time to buy because the prices are going down.
  • This is the best time to buy because interest rates will go up.
  • This is the best time to buy because the inventory of available real estate is at a high.

Hm, same list.  Why is it different?  It’s obviously not, but the crux of the question is in our mental attitude.  If you can afford the property or if you can make money with the property, now is a good time to do so.  If you will cringe at the thought that maybe you could lose everything, should you decide to play in the real estate pool, maybe now is the time for you to rent.

Real estate ultimately should give you warm fuzzies about your abode, the home where your heart is, or a nicely padded feeling to your bank account balance.  If neither of these things happens, do something else which makes you happy.  Life is too short to feel anxious on a daily basis!

By the way, I have several properties which are wonderful rentals!  Just ask.

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