Maine Real Estate Rally Continues

Whether the real estate market is in turnaround is still a question, but what's not up for debate is that some market insiders are detecting encouraging signs. One real estate agency in Savannah, GA, reports a healthier first quarter than a year ago. A suburban Detroit broker is seeing an uptick in sales volume. Even hard-hit areas of Florida, Nevada, Arizona and California are showing signs of life. In some cities, home inventory is less than half of what it was 15 months ago, and homeowners are entertaining multiple offers.

Low interest rates and attractive housing prices have lured some people back in the market. What's holding other qualified buyers back? It isn't financial instability or lack of liquidity. Call it market angst.

Fear of Commitment?
Celia Dunn of Celia Dunn Sotheby's International Realty says, "fear of the unknown" is keeping some people from taking advantage of dramatic price reductions in her two markets of Savannah, GA, and Bluffton, SC. "They're still hesitant to commit," she laments. Yet, first quarter 2009 sales topped those of 2008, and her office is closing on multiple homes every week. Dunn represents a mix of primary and second-home properties in historic districts, waterfront areas and on islands. For those ready to dip their toes back in the water, it's a rosy picture. A home in the Savannah Historic District that originally listed for $3.1 million just sold for $1 million. A private island off the South Carolina coast priced at $15 million is down to $10.5 million. "People can get so much more for so much less," Dunn says.

Not long ago, risk was associated with rewards, but the drumbeat of sagging economic news has made people risk adverse, even when their personal finances are sound. Dr. Gregory Berns, a professor of neuroeconomics at Emory University School of Medicine in Atlanta, GA studies the biology of the brain and its influences on decision-making. He has done several experiments using magnetic resonance imaging to learn how individuals are influenced by other people's opinions. It turns out those opinions can affect "subtly and not-so-subtly" how an opportunity is perceived. "When others hold back, that tends to make you hold back," Berns says. In other words, your gun-shy neighbor's investment reticence could cause you to doubt your own strategies. "It could be a good opportunity right now for investment," Berns says. "Wait and you may miss it."

Some waiting on the sidelines are those trying to time the market. But figuring out the bottom is difficult, according to Lawrence Yun, chief economist at the National Association of Realtors. "There's always regret about buying too early or having missed out at the bottom." For people who are financially capable and who stay within their budget, today's market presents "a tremendous opportunity," Yun says. "One is looking at 50-year-low mortgage rates. Combine that with falling home prices in many regions and buying power has increased significantly."

Falling In Love With The Deal

Real estate in the Detroit area has been especially hard hit because of auto industry woes. In the northwest suburb of Birmingham, MI, Douglas Hardy, chairman of SKBK Sotheby's International Realty, says, "We have a lot of people a bit paralyzed and unable to move because they're not sure they're going to still be employed. I understand it completely." And yet, Hardy says the abundance of attractive deals across every price range is starting to drive the market to the point where "it may no longer be prudent not to take advantage of great housing prices." Three years ago, SKBK sold a home for $1.2 million. They resold that same home for $600,000 a few weeks ago. "It's a phenomenal house and it was on the market a week."

Sales of top-tier homes in the upper reaches of the real estate market haven't been as affected as houses on the middle and lower ends, Hardy says. That's because buyers have the liquid assets necessary to make substantial down payments. "We're seeing high-end properties appear on the market and disappear in just one or two weeks." It's a glimmer of hope. As the supply goes down, prices start to stabilize.

Buyers poised to take advantage of attractive home prices are re-entering the market with facts and not with fear these days. They're relying more heavily on the expertise of their real estate agent and tax advisor for professional advice that will allow them to make prudent decisions. Emotions are being excised. "When people look at real estate now, they no longer fall in love with the house," Hardy says. "They fall in love with the deal."