The Biggest Real Estate Story of 2006 was the story that wasn't, I am happy to report, the bubble never burst. Lots of people are blaming the media for creating these concerns, but in the end, fundamentals won out. Consumer confidence is starting to rebuild, and bigger market forces than the media are driving the market, Homeownership is a safe, secure way to build long-term wealth. The national median price of homes bought ten years ago has increased 88 percent. The number of US households is expected to increase 15 percent during the next decade, creating a continued high demand for housing. I came across this survey of 923 real estate agents, brokers and executives who responded to a survey request in Agent to Agent, an online magazine, with predictions for trends in the coming year:
What's in? Homes that are priced right: Look at only the sold comparable's from the last 3 months. LOOK AT THE FACTS and price accordingly. Savvy buyers: With interest rates historically low and pent-up demand from a soft year in 2006, "Deferred demand" from 2006 could ignite a mini-frenzy. Upscale garages: Today's garage owners want them decked out with cabinet and storage systems, mini-refrigerators, insulation, heating and air conditioning and durable but residential-looking flooring. Two home office: Size matters, make sure each is at least ten-by-ten feet. Building green: Based on three areas; energy conservation, indoor air quality, and resource conservation. Natural forms of energy, such as wind, solar, and geo-thermal if available on-site, are maximized. Structured wiring: Must-have for technology based home buyers. Coaxial TV cable, voice, and data lines, distributed radio, remote camera security are wired through out a home into multi-outlet boxes called home network centers.
What's out? "As is" in home sale marketing: Anything went in the boom market, but if you're planning to use "as is" in 2007, forget it. Buyers see it as a red flag about the home the seller. You have too much competition to be chasing buyers away. Buyer incentives: Gimmicks only confuse and distract buyers. Cut to the chase and deduct the cost of your free-with-purchase from your current price and send the signal to buyers that you're serious about selling. Bedrooms not large enough for a bed: In the boom, rehabbers and developers learned the fastest way to profit was to increase the room count of a home of an existing home. Bedrooms shrunk size when a four-room one-bedroom was gut-rehabbed into a four-room two-bedroom. Over-full-price offers: It was a strategy in the boom market to under-price a home and let the market set the selling price. Not today, one thing that won't change in 2007 is that every buyer will want a deal, and walk from one if they don't get one. Endless Open Houses: The open house pendulum has swung from "the house sold in the first day" to "we need to have our house open every Sunday." Desperation is when your home is open every Sunday. Buyers know and track it. Plan on every three weeks to have a public open house.
This Week's Real Estate Insight: By the late spring of 2007, the media will likely begin reporting positive "uplifting" trends. Statistical momentum says that will inevitably happen. Many potential buyers will regain the confidence to enter the market. Some smarter buyers will see the herd of impending buyers over the horizon and will want to get a jump start.
