It’s a relevant question going into year end for most folks that are participating in the mortgage and real estate markets. There are several reasons for this but the bottom line is your opinion. The market seems to be approaching, or at an interesting inflection point, where things may start to improve significantly or deteriorate. Your thinking on what happens next will be the driver in the next action you should consider taking.
If you are thinking that the economy may be on the mend you have some things to do quickly. If you are a consumer in the market for a mortgage, get it done quickly. If refinancing, take those steps right away and make sure that you lock in your rate and have enough time to get the loan closed. In today’s mortgage world, that is a minimum of 45 days. If you are thinking of buying a home, you likely have more time. Though rates may rise, you don’t have a real risk that home prices will go up dramatically any time soon. With the shadow inventory of foreclosed homes, a spike in prices is unlikely. You may pay more for your mortgage, but if you get the right home at the right price, that is OK.
If you are a real estate or mortgage professional and you think that the economy is on the mend, you have a different story on your hands. You have to be prepared for a rising rate environment. How will you generate new contacts, as your old ones are not likely to need your services any time soon? How will you brand yourself and what new offerings will you make to the market to ensure you participate in the recovering economy.
However, if you feel that the market is likely to take another step down, things change. For the professional, it means getting even better at the short sale and foreclosure avoidance business. It has dominated the last two years but could run another three is a recovery does not take hold. Additionally, there is likely to be further erosion in home values associated with any further drop in the economy. This may make the market even more challenging. How will you be of service to your clients? What value can you add to make their lives better and earn a living for yourself and your family in the process? So you have to be right about the market and then be right about your choices in service offerings.
For consumers a further drop in the economy really has only one thing to consider: deflation. Things, like your home will depreciate and be worth less over time. A very important corallry to that is to reduce and eliminate debt. Consider all means of debt reduction. In fact, for the consumer with a mortgage the move is to refinance and reduce your term.
The waters are too muddy to make a guess on which way this is going to go. However, the consequences are likely to be as strong no matter which it goes. Your guess is as good as mine.
