Strategies for a Transitioning 2006 Real Estate Market

Real estate consumers are the winners in the latest round of real estate
bubble headlines. The media's focus offers information and opinion on markets
and practices to the individual property owner and investor. Mark Nash
residential real estate author of 1001 Tips for Buying and Selling a Home offers
strategies for consumers on how to read signs of a softening market.

Warning signs for consumers are:

-Incentives offered by builders on completed new construction buildings or
homes; this indicates an over-supply of new units. Research the length of time
of property has been on market in a specific location. If the majority of sold
properties have sold in thirty days or less in the past ninety days, but the
current market times for the majority of sold properties are 60 or more days,
the market is softening.

-Diminishing multiple-offer bidding wars. Inquire of several full-time mid to
high producing real estate agents in a specific market what percentage of
properties going under contract are receiving multiple offers. If the number of
properties are being sold in multiple offers is declining, the market is moving
away from being a sellers market.

-Rising absorption rates for properties currently for-sale. Compute the
absorption rate of like-kind properties for sale in a specific market. Example:
10 current listings of single-family homes priced $1000,000 to $125,000. Number
of comparable homes sold in the last 12 months: 100/ 8.3 sold per month. Number
of comparable homes sold in the last 6 months: 50/ 8.3 sold per month. Number of
comparable homes sold in the last 3 months: 10/ 3.3 sold per month. Current
number of months inventory for comparable current listings: 3.

-Rising mortgage rates. Home prices and mortgage rates affect each other, as
interest rates fall, buyers can afford to pay higher prices for housing. As
rates rise buyers qualify for lower mortgages. Higher interest rates shift
consumers spending from home prices to mortgage interest expense. Watch interest
rates as an indictor of deflating prices.

-Increased use of interest-only and 100% financing. The majority of buyers
have purchased in the last three years. The leftover buyers could be
credit-challenged. If your receive an offer with no-money-down and/or
interest-only, your buyer has no risk exposure and could walk before closing.
Ask for five-percent earnest money to bind your buyer to performing the
contract.

-Read and understand market signals. Many individuals missed red flags in
their technology investments. double and triple market times from a year ago,
high absorption rates and rising interest rates signal that the market is
evolving into a buyers market. Consider selling before price declines erode
profits and the entry of bargain hunters. Understanding the market signals and
timing can mean the difference between profit and loss in today's declining
residential real estate exuberance.

Mark Nash's fourth real estate book, "1001 Tips for Buying and Selling a
Home" (2005), and working as a real estate broker in Chicago are the
foundation for his consumer-centric real estate perspective which has been
featured on ABC-TV, CBS The Early Show, Bloomberg TV, CNN-TV, Chicago Sun Times
& Tribune, Fidelity Investor’s Weekly, Dow Jones Market Watch, MSNBC.com,
The New York Times, Realty Times, Universal Press Syndicate and USA Today.