NAEBA Experts Help Buyers Understand Market Timing and Other Factors Impacting the Right Time to Buy

Dec 13, 2017Real Estate Tips

You know the saying “What goes up, must come down.” and the real estate market is no exception. But how will we know when, why and how to handle it? NAEBA (National Association of Exclusive Buyer Agents, are positioned to help buyers understand market timing. According to NAEBA Executive Director Kim Kahl, the real estate market cycles through expansion, equilibrium, decline and absorption, it is important to understand why each point in the cycle is occurring as to react to and make decisions regarding your property value accordingly. The NAEBA website, www.naeba.org, helps buyers to understand the process involved in several kinds of purchases in all kinds of markets. In a growth period, natural expansion takes place. The economy is stimulated by more people moving into the area to fuel more businesses. Anyone looking to buy, can afford to because business is going well and anyone looking to sell is happy because they will receive at least what they expected for their house. But eventually, prices top out and we’re all at a stand still. Purchasing slows which means selling slows.  When everything settles it is the period of equilibrium. The next phase is the decline. Since the businesses were no longer growing, they began taking cost-saving measures, laying off employees and moving to less expensive markets, which drives down the demand for housing. When rent begins to drop it is an indicator sales value is dropping too. This decline period will last until prices fall low enough that the property is again attractive to businesses and investors causing the cycle to start over. Problems may arise when many properties are being purchased around the same time, either because a number of people are relocating there, or especially, because investors are finding deals and rapidly purchasing properties. This can make the values skyrocket but in a false and inflated way. Then when property values are high and earning power has stayed the same, owners can no longer afford their homes and they put them up for sale creating more supply than demand and the prices fall again. This is why the appraisal value affects the market. It is crucial to get a fair appraisal that takes into consideration where we are in the market cycles. Appraisers study the market, they do not create the market, so the pricing of neighboring homes influences the value significantly. Inflated appraisal values factored into the housing crisis.  According to the Examiner people overpaid for homes they couldn’t afford thinking the market would continue to rise and they could cash out but then crash caught them by surprise. The market was left with too many overpriced houses, ARM mortgages were resetting interest rates, principal payments increased and foreclosures ensued. Then as loans began to default the mortgage based securities market struggled. As of May 1st the Federal Housing Finance Agency paired with Freddie Mac to create the Home Valuation Code of Conduct. According to the Dallas Business Journal the code is intended to “enhance the independence and accuracy of the appraisal process.” It is a layer of protection for the homebuyers, mortgage investors and the housing market.  NAEBA vows to follow the code of conduct and believes this is a form of much needed quality control. Though, there has been some controversy, only time will tell the impact of the code of conduct. NAEBA will stand by you through the any market cycle. Not only does NAEBA stand by the Home Valuation Code of Conduct, NAEBA has its own code of ethics in order to establish trust, integrity and professionalism. We will look forward to working with you for your best interest. For information about NAEBA, contact Kimberly Kahl, CAE, NAEBA Executive Director at 888-NAEBA99.


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