Few will disagree that these are scary times in real estate and financial markets. Inventories of homes for sale are up, prices are largely (but not always!) down. Market time is up, sales are down. Foreclosures are up, major banking and investment firms are crashing down. What is one to make of it all? How did we get here? And, more importantly, where are we heading?

First of all, despite what you might be hearing in some circles, the world isn’t coming to an end. To a fair degree, much of the doom and gloom is us—you and I—buying into media negativity. A recent study rated a sampling of prime time news reports as either positive, neutral, or negative. Negative trumped positive 17 to 1. If it bleeds it leads, as the old cliché goes. This doesn’t help an already struggling market. People in a negative frame of mind are generally not inclined to make major purchases like homes.

That said, there’s no denying that the markets are going through a period of change. What precipitated this? The answer in a word is greed, in my humble opinion. Eager for profit and emboldened by government deregulation (for a substantive summary of the government’s complicity in the current collapse through reckless deregulation go to: http://www.dailykos.com/storyonly/2008/9/21/9322/74248/245/602838 ), lenders began to make riskier loans to under-qualified borrowers, loans that venture capital groups seeking “easy” gains were quick to snap up. With so many new potential buyers in the market, prices rose quickly. This, in turn, encouraged the financial markets to make even riskier loans on the myopic assumption that prices would continue to rise at a healthy rate, maintaining an ever-increasing protective layer of equity. The borrowers themselves made the same assumptions, many of them leveraging themselves beyond prudent limits. Eventually, reality started to catch up with this reckless procession, like a snowball rolling down a mountainside.

So, where do we go from here? For starters, it behooves us all to rise above the incessant stream of negativity from the media and consider some of the positive aspects of the market. We have to realize that all real estate is local. It makes as much sense to talk about a national real estate market as it does to talk about a national weather forecast. Not all real estate markets are in trouble, and the severity of the problem is not the same among the ones that are.

Secondly, we need to recognize that every challenge also offers opportunity, and today’s real estate market is full of opportunity. Interest rates have been holding at near record low levels, lower even than they were when I started my real estate career in 1972. Higher inventories mean greater selection for home buyers, and depressed prices offer many excellent opportunities to obtain a home at a significant value.

Finally, it is important to know that this difficult time, like all difficult times, will eventually pass. No one can predict with certainty when that point will be reached, but most prognosticators seem to think it’s not going to happen overnight. Recently, however there is hope that responsible action on the part of the federal government will provide an opportunity for markets to stabilize and to move forward. The ultimate cost of this is also an unknown, but history teaches that in the long run the cost it will not likely be as great as some naysayers are predicting. We need the Congress to put aside politics and work in unison for a plan that makes sense, because the housing and financial industries affect too many segments of the national economy to allow them to go into freefall.

Bob Dohn
www.BobDohn.com
Coldwell Banker Residential Brokerage
140-A South Roselle Road, Schaumburg, IL 60193
Direct Phone: 847-301-3126