PARAMOUNT MORTGAGE - LENDER'S BLOG

by Matthew Graham - Mortgage News Daily

If you don't have a TV, a radio, or a newspaper, you may have missed all of the negative press surrounding the mortgage and housing markets. The severity of the situation has created a sort of panic that has paralyzed the consumer. Rather than deal with any aspect of the problem, we wait for someone to yell: "it's OK to come out now!" If you are waiting for a "bottom" to the overall crisis, and for all the news to turn positive, don't hold your breath. But where there's tragedy, there's opportunity. Let me show you why it is, in fact, "OK to come out now," and why you might be sorry if you wait too long.

The Pendulum Effect.

Depending on the data you are looking at, national average home prices are down significantly. On average, this trend will continue, but consider three things. First, the hardest-hit markets drag down the average depreciation. Second, mid to high priced homes were more inflated than entry level housing. When those homes depreciate, they have farther to fall than a lower priced home. This also brings down the average. Finally, because panic can create a knee-jerk reaction among sellers, and market perception can create a hesitance among buyers, prices can be lower on the way down than they will be at the bottom.

What does this all mean? It's a GREAT time to shop for a moderately priced home. When the market has found a solid bottom and the demand returns, there will be a lot less ambiguity about what a home in your area is really worth. Sellers will be less willing to entertain offers, and selection will decrease.

Read the full column here