The market for purchasing Smith property has never been better. Our current situation can be described as the real thing, a true buyer’s market. For those of you who are mulling over the purchase of Smith Lake property, our existing market conditions, that being pricing, inventory and financing, now offer buyer’s an extraordinary, one time opportunity. Let’s take a look at the components used to evaluate the status of our Smith market. The relationship between pricing, inventory and financing ultimately determines the status of our market. With a little in depth examination, we can better understand why our current market conditions are so favorable. Lake Lake
Pricing in its simplest form, is determined by what someone else is willing to pay for your property. Building costs, along with supply and demand continue to effect pricing. The buyer’s perceived value however will ultimately dictate a property’s actual selling price.
Let me clarify one point regarding real estate. Many sellers believe their property should sell at, near, or above the appraised value. Be clear on this, appraised value is a measure of worth, not to be confused with what something will actually sell for. Today pricing on Smith has reached equilibrium, in other words, our pricing today is no longer influenced by peak market activities such as, continued speculative building, an influx of re-sellers (flippers), or large numbers of unimproved waterfront buyers. Lake
Inventory, or the number and type of properties currently for sale, provides today’s buyer with numerous choices. The availability of size, price range, and property location has never been better. With the economic climate being what it is, sellers are putting their property on the market for a variety of reasons. Many owners who planned to use their lakefront property for the foreseeable future, have now decided to sell. This benefits prospective buyers because the number of properties for sale at any given price point has increased.
The costs associated with financing are now at historic lows. Never has there been a time when you could finance the purchase of a lake home using the low financing rates now available. With a good credit rating and a reasonable down payment, you can secure very attractive terms from your mortgage lender. The conforming loan ceiling was adjusted upward to $417,000 during 2006. What does this mean to a prospective buyer? You can now borrow up to $417,000 and your loan is qualified to be purchased by either Freddie Mac, or Fannie Mae and therefore will be more liquid.
Let’s summarize what I have shared thus far, we currently have realistic pricing, excellent selection and historic low cost financing. Under normal circumstances it would be unusual for all three of these components to be at optimum levels. No one can predict when current conditions will change. Many people waited during the period of 2000 – 2003 to buy lake property only to experience a steep rise in the cost of building, or buying during the years of 2004 - 2007. Here is a word of caution, the current market conditions that we now enjoy may not return any time soon.
Who is buying property on Smith today and what are they buying? A great majority of those buying property on Smith this year are purchasing a lake home for personal use. These buyers are looking for exceptional value. While many are cash buyers, a good number are taking advantage of the low cost of borrowing and financing their lake home purchase. Lake homes priced in the 250K to 500K range make up the majority of lakefront property sales YTD. Lake Lake
Many people have now begun to question traditional investment strategies. Smart investors have reviewed the stock market’s rate of return over the past ten year period and many have concluded there are alternative opportunities. Conversely, during the past twelve month period, sellers of improved property on Smith, as a group, did not experience any significant loss of value when selling their lake property investment. In fact, a great majority of these sellers realized good rates of return on their lake property investment. Lake
There will be an economic resurgence over time and many contributors to the economy will adjust accordingly. The upside potential for increased costs with financing will be high, almost a certainty. The inventory of Smith Lake properties for sale in the 250K to 500K range will most likely shrink, (no appreciable amount of speculative home construction) as an increasing number of owner’s in this price range make the decision to hold on to what they have. The cost of building a new lake home will continue to increase. Existing lake home pricing will adjust according to supply and demand, the cost of financing and the overall state of our economy. Once the news media begins to publicize the fact that our economy is on the mend, the cost of buying property on Smith will have already begun to increase. Lake
If you are considering the purchase of lake property at Smith, it would be a good idea to speak with a qualified realtor who can bring you up to date with current trends and conditions. Finally, there is a lot of truth in what I am about to share with you. A previous client of mine said to me during the year 2006 “I shouldn’t have waited”! The three hundred thousand dollar house he could afford now cost five-hundred thousand dollars. Lake
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