I heard some "good news" this week at my bi-weekly GNFCC meeting. It is that people are starting to purchase homes again for personal use. That is good news, but how do we get the foreclosure bargain mentality to change and get the market to move in a more positive direction? I'm not talking about 2006 and 2007 numbers...just a recovery of sorts; where buyers are comfortable investing in a new property.
The past few years created a market where buyers are not confident unless they are getting a price below appraised value, and appraisers are not confident in declaring a value above contract price. As investors and home buyers, we are caught in a chicken and egg dilemma, which may only delay recovery. Only a few short years ago, buyers were not concerned because they "knew" the property would increase in value, so at whatever price they paid, the buyer thought it was a deal. It is true that theory did not work out for many purchasers...but over time real estate can be the investment it once was, although most likely not at the same rate of return.
Personally, I think we all need to get back to the basics. If the property is in a good location and can be purchased for a fair price in the current market then the potential for return should be there. Don't borrow more than you can afford to pay back, even if the equity is available. Hire qualified professionals to help you with your transaction. And lastly, buy a home or a property because it works for you and not based on assumed future appreciation.
This is personal opinion and not legal advice.
I would love to hear from real estate agents, brokers, lenders and appraisers to hear what they are doing to help the market and their clients at the same time.