Edge Blog

Unless you live in a cave, you have heard through various forms of media about the change in the real estate market.  Depending on your location, these changes may be more or less severe.  The media tends to report on nationwide data which of course is heavily swayed by the volatile coastal markets.  Snuggled comfortably in the mid-west, the St. Louis market has certainly changed but our house values have decreased at a fraction of the national average. 

What does that mean to us?  Well, depending on the neighborhood, house prices have fallen 3% to 10% over the past 12 months.  That is scarey, right?  Well, not really.  Don't forget about 2000-2005.  This was a time of complete madness in the real estate market.  Houses were selling in 1 and 2 days with multiple offers, resulting in above asking prices.  At the beginning of this madness, there was not much inventory.  Buyers were forced to act quickly and jump on the first house that "will do".  That coupled with record low interest rates and loosened mortgage approval guidelines started a real estate frenzy. 

Sure those were the good 'ol days, but it is time to come back to reality, which is exactly what the market is doing - self correcting.  Don't be scared by lower sale prices in your neighborhood.  As long as you did not buy in the past 2 years and are trying to sell now, you are fine.  There has still been a continual appreciation in our market over the long haul.  Real estate is not  short-term investment.  Equity is built slowly over time.  So take a look at your equity over the past 5-10 years, not the past 12 months. 

So sellers:  Take a breath and don't panic if your house is not selling for 5% over your neighbor's last year.  Remember there is a surplus of inventory right now, so PRICE IS KING!  Econ 101 --- high inventory, low demand = lower price.  Plain and simple.  If you are hoping to make $20,000 in 2 years, now may not be the time.  Be realistic and price competitively.

So buyers: Don't panic and think you better wait another year to see what the market does.  Now is the time to buy.  Think of 2007 as one big Real Estate Sale --- 10% off!