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With the availability of low interest rates and federal tax credits, now is the time to buy a new home.
That was the advice from Pat Riley, president and COO of Allen Tate Co., who spoke to about 100 people at the Lancaster County Chamber of Commerce membership luncheon March 23 at the Lancaster Golf Club.
Riley discussed national, regional and local housing market trends, as well as the future outlook for Lancaster and surrounding counties.
Riley, a member of the board of directors for Leading Real Estate Companies of the World, a global network of 700 independent real estate firms, said prospective home buyers should take advantage of current market conditions, including low interest rates, low home prices and an oversupply of available homes for sale.
Riley said the national push to promote home ownership over the last few years led to an artificially inflated housing market, which in turn led to a “perfect storm” of problems. He said this included “loose lending” practices and banks and mortgage brokers selling homes to those who couldn’t afford them. This has led to massive defaults by home owners.
“A lot of them didn’t have to guarantee their income and many took part in adjustable rate mortgages,” Riley said. “Even today, people are being put into homes that shouldn’t be put into homes.”
Adding to these problems were significant drops in the country’s stock market.
Riley said people began to have less confidence in stocks and sought a stable place to invest their money. This led to more people investing in what they thought was a strong real estate market. He described the period between 1997 and 2008 as “the bubble decade.”
“They were putting their money in a hyperinflated real estate market that was already inflated,” he said. “The stock market wasn’t performing, the real estate market was and everyone went there in droves.”
The good news was that Lancaster County had nothing to do with this problem. He said county residents should not be afraid of buying a home, because that fear to participate in the real estate market could end up hurting them even more.
“Anybody who doesn’t buy right now is missing out,” Riley said. “People will look back at 2010 and say it was the best time in history to buy because we’re at the lowest rates.”
He predicts it will take another couple of years before the housing market in this region fully bounces back, with secondary housing markets coming out of their slump in 2013 or 2014.
Riley said Lancaster County needs to focus on job creation, which will feed the local housing market. He offered several suggestions to home buyers at the meeting:
u Don’t wait to buy a home, because interest rates will soon rise and may not decrease for a long time. He said those with steady jobs and money to buy a home should consider buying now, especially considering current low interest rates and the availability of federal tax credits.
u Don’t wait for that “great deal,” because while you’re waiting, you could lose out on a new home.
u For those with poor credit, he recommends meeting with a credit counselor to come up with a plan to meet the qualifications for buying a home.
For sellers, he also made several recommendations:
u Make your home “the shiniest apple.” This means making sure it stands out among the many houses on the market. He suggests making sure the home looks good in photos and is clean and clutter-free.
u Do the work for the potential buyers. Change children’s rooms or rooms with bright color combinations to reflect a more neutral environment.
u Keep the price reasonable and offer warranties or job-loss protection as part of the sale to attract more buyers.
“It’s important and I wish more people in Lancaster County would understand we weren’t as impacted by the housing bubble as in other states,” said Dean Faile, president and chief executive officer of the Lancaster County chamber. “We’re still in one of the fastest growing areas in the state. Home buying is big towards helping the economy and supporting job creation.”
Karen Baxley, a vice president with AgSouth, part of the farm credit system, attended the luncheon to be more aware about the local economy and the future of the local housing market.
“Knowledge is power and anything we can do to learn about the economic outlook and what the housing market is going to be doing is good for us,” she said.
Jack Ratcliffe, a Realtor with Allen Tate and Indian Land resident, agreed with Riley’s assessment for home buyers and sellers. With interest rates and home prices down and an increase in the supply of homes, this is a good time for home buyers, he said.
“I’d say if 2007 to 2008 was the perfect storm, then this is the perfect calm,” Ratcliffe said.
As for sellers, he recommended they “get real” with their expectations about selling prices and make sure their home is in pristine condition for prospective buyers.
Contact reporter Chris Sardelli at email@example.com or at (803) 416-8416.