Let’s get real!

4.10.08 - I was watching the business news and taking in all the banter about ailing financial institutions, the USA’s bail-out strategies, finance ministers and opposition leaders duelling over whether or not the banks should and will pass on interest rate cuts and I got to thinking about our own real estate market place. Firstly let’s take a look at supply and demand. Ordinarily spring is a well supplied time of the year when it comes to housing stock. With the exception of 2006, spring has always lead the way in terms of volume on the market and volume sold. It makes sense – the lawns and gardens look good, the temperature is about right and our available time to purchase a home is pretty good as winter sports are over and summer ones haven’t really started in earnest yet. So, supply is starting to get back in line and you will notice that we are already bringing a number of good homes to market at the present. So what about demand? Well the buyers are out and they are buying. If you’re a buyer then I am sure you would agree with me that there are more buyers about now then there were a month ago and if you were looking this time last year you know that in the next few weeks those numbers will bolster even further. Historically at the time when buyer activity starts to energise the competitive nature of environment invariably results in prices rises. With most of the talk this week on liquidity and interest rates we have to give proper consideration to what effect these will have on real property demand and prices. Over the past few years getting the necessary finance to get into your preferred home has been relatively simple – if you make the grade and your risk profile is acceptable then lenders were competing for your business. Not so now though. With interest rates heading south but with bankers and lenders still nervous about risks and their returns we are noticing that their lending is tightening. They are asking for more evidence to support the mortgage and they are inherently more conservative with valuations. The effect is that for those with strong financials getting the finance shouldn’t be an issue but for some of us we need to act more cautiously. So what should you do? If you are ready to move then my advice would be to meet with your lender, broker or financial advisor and seek pre-approval, that way you can have every confidence to make a sound decision. Next, get out there take a look at some of our great homes and be prepared to act when you find that right home – else, you might regret not making the smart move.