Ignor the headlines
Famed stock picker Peter Lynch made a name for himself showing
investors how they could beat the street by focusing on stocks of companies
where they either work or shop or have some other special knowledge. But
a more relevant Lynchism today is this advice: ignore the headlines.
If you read about the subprime implosion, the wave of foreclosures, and
falling home prices, you might not ever want to buy real estate. But if
so, you could be missing out. The reason? Not every real estate market
is the same.
Let's look at the Northern Neck. Yes, inventories have grown over the
last 12 months, making it more competitive to sell property. But as winter
began to end, local real estate sales began to pick up. Anecdotal evidence
from local brokers shows buyers are returning to the market. Not in huge
numbers, but in solid numbers. Interestingly, demand for property with
five or more acres seems to be rising.
And even over the last 12 months, there has been little slow down in
interest in high-dollar waterfront property. This data is consistent with
sales figures from New York City, showing residential property in Manhatten
is still red hot, and is selling for record prices. Why? Because that's
where the money is, and people with money are still buying real estate.
The Northern Neck is still very attractive because it's a value compared
to other coastal areas on the East Coast. In uncertain economic times,
buyers like the idea of owning rural land, and there's plenty of that
around here.
What there isn't much of is high density developments - McMansions crowded
on half-acres in sprawling cookie cutter developments on the outskirts
of cities like Ocala, Plano, and Reno. That's where the nation's housing
crises lies, and it continues to have a negative effect on the market
as a whole. But real estate is local, and not all markets are the same.
It may be a good time to explore what the Northern Neck real estate market
has to offer.
Real estate rebound?
While many parts of the country are plagued with home foreclosures,
the Northern Neck has - so far - emerged unscatched. In fact, there's
growing evidence the worst of the real estate slump is behind us. Read
more.
It is true that sales have slowed, along with the frenetic
homebuilding base. But the rising inventory of homes has not seemed to
have had an impact on prices, perhaps because Northern Neck Real Estate,
despite its recent gains, still lagged other areas of the East Coast,
including the Eastern Shore and Southern Maryland. Most recently there
was this optimistic
report from the Conference Board, suggesting the housing correction
may have bottomed.
Banks Still Fear Making Loans
There seems to be one thing holding the real estate market back. It's
very hard to get a mortgage, especially for an expensive home. Mortgage
lenders have gone from making foolish and very risky loans to putting
their money in a mattress. Why?
Because the large players that are holding billions of dollars in loans
aren't exactly sure how many of them are bad loans. For that reason, they
are holding onto cash. Lenders who flip mortgages are dead in the water
because no one is buying mortgages right now. So even though its a buyers
market, there are fewer buyers because the banks aren't lending. Some
mortgage brokers think the situation won't improve until
the government steps in to reassure lenders.
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