How can I determine my local market conditions?

Timing counts when it comes to buying a home. The last thing you want to do is get stuck in the middle of a hot seller’s market, but the good side is that real estate—like all economic forces—is cyclical. A way to find out what your market is like on your own is by flipping through the Sunday real estate section of the newspaper for a few weeks, running your finger down the list of single-family homes and attached housing options (condos, town homes, etc.) available in your targeted area. You can also log on to a local real estate brokerage’s Web site to gain access to certain parts of the MLS (multiple listing service, where all of the properties for sale in an area are compiled) system via a system known as ‘‘broker reciprocity.’’ Use the service by first finding a local real estate site, then clicking on a link that will be labeled something like, ‘‘view all local MLS listings.’’ After putting in some parameters (house size, number of bathrooms, etc.), you’ll get a listing of homes available in the area. Individual real estate offices, agents, and companies like BuyOwner.com (www. buyowner.com) also list homes for sale, searchable by geographic region.

Understanding Buyer’s and Seller’s Market

A seller’s market exists because the quantity demanded by the buyers at a given market price exceeds the quantity supplied by the sellers at that price. In real estate, that means buyers are seeking out more of the goods than sellers are willing to sell, so sellers can pick and choose whom they sell to among prospective buyers. Buyers are lucky to find a desirable home at the right price in such a market.
A buyer’s market is just the opposite, and one you should be hoping for as you go out in search of a home. It exists because the quantity supplied by the sellers at a given market price exceeds the quantity demanded by the buyers at that price. In this situation, sellers are seeking to sell more of the goods than buyers are willing to buy, so buyers like you can pick and choose the goods purchased from the sellers, who are typically eager to unload their homes at a fair price.

What’s the market like for first-time home buyers?

The answer to that question depends on a few different factors, like your geographic location, whether your region is experiencing a ‘‘seller’s’’ or ‘‘buyer’s’’ market right now, and what the average home sales prices are. Working in your favor are low mortgage interest rates, flexible loan programs, and a variety of homes to select from as ‘‘move up’’ buyers (those moving from starter homes to larger dwellings) also take advantage of low interest rates to upgrade their own living situations. Also in your corner is the fact that the supply of housing—including single-family, multifamily, and manufactured housing—is expected to increase by nearly 2 million units (or 1.6 percent) in 2004 alone, according to a Merrill Lynch & Co. housing report. That means more available properties to purchase, and a better selection of housing options for first-time and experienced home buyers.
Working against the first-time buyer are property appreciation rates that range from zero to a staggering 25 percent nationwide, depending on where you’re located. In some areas, that kind of appreciation has bumped up the prices of starter homes to $75,000 to $150,000 (in some metro areas that number can be much higher) while stoking a great demand for such properties. In metro areas like Houston and Miami, and throughout much of the State of California, such properties are either hard to come by or hard to purchase, since they sell within a day or two of hitting the market.