by Osman Parvez
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“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…”
– Charles Dickens, A Tale of Two Cities

There’s a silver lining to the housing bubble. Sure, it’s less sensational than upside down borrowers being tempted to walk away from their mortgages. It’s clearly less sensational than what Britney or her sister are up to. But guess what? It’s information you can use. Here’s 7 reasons you should love the (post) housing bubble.

1. Fewer speculators. Get rich quick schemes are no longer on late night television. Gone are programs that promote “no money” down, fraudulent tactics to purchase properties for “income.” Fewer speculators means a healthier market in the long run.

2. Lower rates. As the Fed has already hinted with their unprecedented 3/4 point rate cut, the next 6 to 18 months could represent an opportunity for qualified home owners to lock in more affordable, fixed rate loans. If you own your home with a fairly high interest rate, my advice to you is to start tracking fixed rate loans and get ready to pull the trigger on a low, fixed rate, low cost refinancing. Be sure to use a reputable lender and don’t sign unless you understand your loan conditions.

3. Better qualified buyers. Over the last few years, we’ve noticed our clients have been increasingly able to afford the homes they want. Buyers aren’t looking for a quick buck on a flip anymore, they’re looking for a place to raise their family. They’re more realistic about what they can afford and consequently, more deals get across the finish line. If you’re selling a home, this means that you’re less likely to be wasting time with a flaky buyer.

4. Realistic sellers. They aren’t looking to make a killing anymore. They’re not wondering why California saw 15% appreciation last year but Boulder didn’t. Sure, they still want maximum value from their home but are more realistic about market conditions and generally more open to negotiation.

5. Fewer real estate agents. Everyone knows a real estate agent, right? The good news it that the flood of agents entering the business is over. Today, more and more people are getting real about real estate. Surprise! This is a tough business, and tossing a home on the MLS isn’t enough anymore. The post bubble world is rewarding agents who help their clients with sharp negotiation skills, effective marketing, and a deep understanding of market conditions. In the post bubble world, it’s not as easy to sell a house. Value delivered matters. Agents have to step up with better, more valuable services or get out of the business.

6. More affordable housing. In areas where demand was artificially driven by speculation, prices will fall. Foreclosures, reduced buyer demand, and builder discounts will continue to lower house prices in many markets. In our area, Boulder will likely have flat or even slightly lower prices in 2008. I expect prices could drop further this year in other local areas with less demand and more inventory.

7. Better quality lenders. The bubble encouraged all manner of people to enter the business of providing loans to purchase homes. The rewards were great. The risks were low. The regulations were minimal. No longer. Today, lenders are in the cross hairs of regulators and disreputable tactics have been exposed. Home buyers are aware that they should not only shop for better rates, but for a reputable lender. They’re also carefully reading their loan documentation and asking questions about loan conditions.

image: guano

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