In 2008 when the real estate rollercoaster clack, clack, clacked its way up to the peak there was too much going on for most people to be aware the drop was imminent, myself included.
In 2019 I’m asked on a daily basis if we are in the equivalent of an iridescent bubble floating towards the gleaming point of a pin prick; or are we on a hot air balloon that will gently float back down to the ground? Or will real estate continue to grow in value in the short term?
Consider these contradictory headlines posted recently.
U.S. pending home sales post surprise drop as market struggles
Contract signings to purchase previously owned U.S. homes unexpectedly fell for a second month in November, offering yet another sign that the housing market is struggling.
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November home prices hit record high
More single-family homes were sold in Massachusetts last month than in any previous November and the homes sold for a higher median price than in any November before, according to real estate market analysts.
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Pop or a float, the general consensus is that a major real estate correction is coming. Almost everyone see’s or senses it, even folks without a real estate interest.
So what do we do? How to we benefit from a reset? And how do you protect yourself?
- If you have a relocation move coming up, consider liquidating sooner and move into a rental.
- If you have an optional purchase coming, consider letting the heavy traffic subside, and merge in as the flow slows in the months to come.
- If you have a HELOC you may be aware of your 19.99% rate cap, or the fact that your payment will quadruple once the draw period ends (when you go into a 10 year repayment period). If values drop enough you will lose your ability to refinance or consolidate this HELOC debt. Addressing this now will give you more options and flexibility in the months and years to come. The country saw this phenomenon several million times over when adjustable rate/interest only mortgages were a hot topic in the last decade.
- Be frugal. With your purchase price. With you monthly expenditures. With your improvement goals on the house. Don’t overpay for a home purchase – strike on your purchase with poise and patience – but don’t let the emotional game control you.
- Try to avoid PMI by pursuing a CRA eligible home which has no PMI expense. View our curated list of local CRA eligible homes HERE.
- Don’t waste money on improvements that don’t build equity or provide utility. Consider kitchen cosmetics in lieu of a full upgrade. Visit your friends man cave instead of building your own.
- Don’t count on HARP or Quantitative Easing to bail anyone out. Those programs are closed/closing (although we are paying back HARP for decades to come). Those occurrences including mortgage modification may not be available next round requiring anesthesia over 2008’s aspirin.
- Spread the word. There’s a younger generation coming up into home ownership. Don’t let them be the generation that needs to delay retirement by a decade. Housing should be a thoughtful, deliberate process not an impulse or quick decision. Coach and counsel them.
- Adhere to your mission and don’t become involved in someone else’s mission or motives.
Since 1999 GoldCoast Mortgage Service, Inc. has arranged over 6,000 error-free, on-time, delivered mortgages at exceptional terms from our Cummings Center, Beverly, MA location. We have had the same phone number for 19 years and are in the top 70 of earliest licensed mortgage companies in the nation. In an age of technology-based applications you will find our guidance, knowledge, and process very enlightening, comforting and efficient. GoldCoast Mortgage Service, Inc. agents are licensed and arrange residential and commercial mortgages in MA, NH and ME.