Last year, in our January Issue, Hawthorn Properties commented on the state of the Boston real estate market in an outlook for 2008. The truth of the matter is that despite unbelievably volatile credit and economical environments, not a lot has changed since then. For those sellers who brought properties to market that were in desirable locations and condition and priced well, the 2008 market likely produced a ready, willing and able buyer. The negative, polar opposite reality of that statement is about properties that either were not priced well, were not in great condition or in undesirable locations or a combination of all or some of these. Many of these properties did not sell leading to an alarming number of foreclosures or sold for a fraction of their asking price or anticipated value. Furthermore, more prospective buyers dropped from the market as credit became more and more unavailable and or expensive. The question before us is whether 2009 will be more of the same or will the market begin to show signs of stability and growth.
Polls overwhelmingly showed that the state of the economy was the top issue for voters in the November presidential election*. The instability of the stock market both directly and indirectly affects the real estate market. Direct effects include the employment status and assets of prospective buyers while the real estate market is indirectly affected by the solvency of lenders, available consumer credit and mortgage rates. By now it is no secret that Congress and both the outgoing and incoming administrations are focused on restoring buying power, but more importantly, consumer confidence into the real estate market.
Restoring buying power through government stimulus programs and attempts to keep rates low is only one side of the issue. If people have the means and the wherewithal to purchase goods and services, they will. Restoring consumer confidence and exorcising the “doom & gloom” attitude that is hanging over the Boston market is the other, and perhaps more daunting, obstacle because no person, group, political party or branch of government can control it. The nagging feeling of uncertainty over one’s job security leads to anxiety over whether the current family savings plan will provide adequate funds for college tuition(s) and retirement let alone mortgage payments and grocery bills. This type of mentality does not usually result in a trip to the bank to fill out a credit application to buy a house.
However, if you are NOT someone who is concerned about your employment status; or you are NOT someone with a bad credit score or a home to sell that is potentially underwater; you are in a great position to take advantage of the market. What better time to be a buyer than one when properties are available at a discount (in some cases) and a portion of the competition is on the sidelines with credit concerns? The reality is that there are plenty of people rightfully concerned about the short term economic climate, but for those who are in the position to continue with business as usual, you should do just that.
For more information about this project or if you have general questions or comments about this article, contact the author – Ryan McDonnell
* According to Politco.com, 62% of voters named the economy as their #1 issue compared to Iraq (10%), health care (9%) and terrorism (9%)