As a prospective Smith Lake waterfront property buyer would I be better off to wait until next year?
As a prospective Smith Lake waterfront property buyer would I be better off to wait until next year? Maybe pricing will come down further and I can get a better deal?
The answer to this question is complex, as a number of factors enter into the equation. What will be the intended use associated with your acquisition of Smith Lake waterfront property? Do you plan on financing any proposed purchase, or will it be a cash sale? Will there be multiple parties involved with the purchase? These are just a few of the questions which must be answered in order to make a wise decision.
Let's take a look at the "lay of the land". Presently the overall market may appear to be "saturated" however, depending on the price point; the number of available properties may shrink over the next twelve months at an incremental pace. The influx of newly constructed mid-priced homes has for all intents and purposes, disappeared. Speculative Smith Lake home construction starts began to decline significantly during year 2009. Over this past year (2010) a significant number of mid-range priced properties have sold, consequently, the amount of available inventory at these price points continues to contract. What does this mean to you as a prospective buyer? If you are looking at improved Smith Lake properties above the four to five-hundred thousand dollar range, there is plenty in the way of inventory available. Conversely, looking for something between the mid two-hundred and four-hundred thousand ranges is beginning to become a challenge.
The old laws of supply and demand will come into play as a shrinking inventory associated with certain price points will determine what price buyers and sellers ultimately negotiate. Making time to acquire a complete understanding of the market, in other words, knowing what amenities a two-hundred and fifty thousand dollar lake property offers versus one priced at three-hundred seventy thousand well help you with the decision making process.
One factor which buyers often overlook when considering waterfront property values, what percentage of property owners at Smith Lake hold full equity in their waterfront investment? Secondly, how many of these properties are second or vacation homes? Why should these items be considered when contemplating the purchase of Smith Lake improved property? The answer here is two fold. Property which is listed with a realtor has undergone a competitive market analysis (CMA) prior to being placed on the market. The CMA indicates what comparative properties have sold for recently and provides the seller with a realistic expectation of what his property will most likely sell for. If a "resident" seller holds full equity in his Smith Lake waterfront property, his motivations for accepting an offer will be much different than someone who is selling because of a job transfer or loss of employment. A similar situation exists with many Smith Lake second or vacation home property owners.
Financing versus a cash sale, what can we expect? At this juncture, the view is somewhat blurred when one contemplates the nascent minutia associated with today's lending environment. The important fact to consider at this time - what, if any changes will come forth regarding lending requirements if I choose to delay my purchase until next year? As an example, many Smith Lake buyers this past year have experienced the effects of Dodd-Frank Wall Street Reform and Consumer Protection Act regulations during the processing of their mortgage application. Is there any sign on the horizon that borrowing requirements will be modified to help stimulate future real estate sales? Lenders are currently familiarizing themselves with a myriad of new regulations, many of which have yet to be fully implemented. Cash sales, at this point "money talks", sellers know that a cash sale is like "moving to the front of the line". There is no loan qualification process, numerous inspections, appraisals etc. to slow down or truncate a potential sale. Typically cash sales can offer the buyer an increased negotiating position, particularly when an expedited closing will benefit the seller.
It is unlikely the cost of financing will remain at current levels over the long term (twelve to eighteen months). With the first sign of sustained economic growth, financing costs will increase. Once the economy begins to accelerate, rest assured the cost of Smith Lake improved properties will follow in unison.
In summary, our experience over the past eighteen months indicates that Smith Lake improved property pricing remained fairly consistent with no significant lose in value. Gone are the days where you could "flip" property in one year and make a handsome profit. Reality is the new "norm" - most sellers now understand present market conditions. We cannot predict the value of our 401K holdings twelve months from now but we are confident that Smith Lake improved real estate will retain a majority of its value.
Posted at 12:47PM Oct 10, 2011 by Sharon Miller in General | Comments[0]
