Home prices across the nation are still showing a decline. News reports said today that the worst hit area was Ft Myers Florida with a 50.8% price plunge in 2008. You might think this is bad and rightly so. Here is one thing to consider about a lot of these areas. The prices there shot up a huge b just 3-4 years ago. I mean huge. Maybe not in Ft Myers so much but in say Panama City or Tampa and other coastal cities. I saw lots there that could be bought 10 years ago for 10,000 going for 200,000 just 5 years later. Well prices do go up, but…. Some of the prices doubled on houses in only 2 years. A lot of these people are crying now that they have lost so much of their value.

Look at it this way. (this is just one angle) You buy a house for 200,000 and 2 years later the market drove it to 400,000. Now prices are dropping and your home is worth 300,000. Shouldn’t people be estactic??? Here in the Austin area if you home goes up 5% a year we think that is unbelievable. Some areas of course did go up more but the prices were depressed to start with. You can still buy homes in the surrounding areas of Austin for prices they sold for 5-7 years ago. I know this for a fact as I have sold them. Some areas have been flat and others have went up. So the bottom line is our prices here have not had the huge jumps. So hopefully we have less room to fall.

Now back to other cities. I talked to a customer who was moving to Austin or rather wanted to. This was last year. He told me that he was asking 410,000 for his home. It sounded like a nice home in a nice area in Orlando Florida. He said it had been slow and he had dropped the price to 410,000. He said though he is not going to give his house away or he will stay. I asked him how long he had lived there and he said a little over 2 years. He bought it new. I asked him if he was losing money and he said no, he paid 200,000 for it. I said then how 2 years later can you expect to double your money? He said, people were doing it and if someone wants mine bad enough they will pay. The market then keep in mind was much better than it is today. I said, well you might as well forget moving as it is unreasonable to think your home can double in value in 2 years. Those days are gone. Sure on paper they did and a few were able to sell at the high when there was a feeding frenzy going on. Dumb people to pay those prices I think. Yeah you might get mad at me saying that. If you did your homework and you found home prices doubled in 2 years I think it is wise to lease as that is not a sustainable market. California is finding that out. Which brings me to another point.

If you watch tv or follow the market at all, you know prices that were in some of these California cities. They were just crazy high and in my opinion are still too high in most of the areas. Supply and demand. My question is how in the world are these people getting loans to buy these average homes for 600-800,000.00? You see them on house buyers on HGTV. (old shows probably) I see young couples starting out saying their budget is 550 or 600k.I think, how in the world can you even get a loan. Are you guys making 250,000 a year or more? No I doubt that very seriously. If you look at the top income earners, you can’t tell me they all live in California.  I see why the loan companies are in the toilet right now. Giving loans to people who shouldn’t be even buying a home was just plain old crazy. I can’t be convinced that all of those people in those areas can afford to buy starter homes for 450k and up. And I mean some tiny little cracker boxes of a house. I am not knocking what anyone can afford but to me if you have to live in a 2 bedroom 1 bath fixer upper for 450k or more (for example) I think it is wiser to lease. Rents are a much better deal. Yeah you heard that from a Realtor. In some markets it is better to lease.

In the Austin area rents are really low right now. Prices have not dropped and sellers overall are not willing to make huge price drops. So they are leasing their homes until the market rebounds some. This can be a smart thing to do but you are banking on the market improving. It could go the other way. Our market seems to be more stable now that it has been the past 3 or 4 months. This is encouraging. I am just thankful that we didn’t see the huge price drops that other harder hit areas have experienced. And California and Florida people, don’t think I am picking on you. You just gave me a great way to illustrate examples of what is happening.

If you are in California and Florida and Michigan, things are not going to get better anytime soon. Remember this… No matter what the press says, until the consumer starts to feel good enough about the economy to start spending again, it is impossible for the economy to improve. We are a consumption driven economy. All economies are. When you see consumption going up, you will know there is light at the end of the tunnel. Not all is doom and gloom. My best advice is this is a good time to buy if you are planning on staying put for a few years. You can never know the bottom. Some areas have a long ways to go down still. Others have already been down longer than others so may be getting closer to a bottom. Follow your heart and study up. I have been at this for over 19 years now. Sure I do it for a living but I am debt free and not worried about the market. It comes and goes. Be careful of taking advice of someone who is worried about where they are going to get the next commission to pay their bills.  When you have money pressures, it can create an influence that might not have your best interests at heart. There are a lot of good agents out there so don’t think their aren’t. I am seeing a lot of questionable ones coming out of the wood work though. (hearing and seeing things happen) Also be very careful and never buy a home sight unseen! We have investors who came in here and bought hundreds if not thousands of properties and a lot of them never even knew exactly what they were buying. This I find amazing! I could never do that but the customer sets the tone. As an agent you offer your opinion.

I have rambled long enough and got off topic. Save your money, pay a bigger down payment and enjoy your new home if you decide to buy. The larger down payment you can pay the better. Having a paid for home is a feeling like no other and the more you pay the closer you will be to that end result.