Calling the "Bottom"

Lately, I haven't posted nearly as many articles as I used to, mainly because most of the insights that I've written about in the past have not changed. In this article, I've decided to comment on what analysts commonly refer to as "the bottom" of the housing market.

I've been reading and watching (on television) these analyst struggling to call a bottom for the current economic turmoil we're experiencing. Some of the more optimistic analysts claim we'll see a bottom at the end of 2009, others claim 2010 or 2011. So which of them are right? I say, it doesn't really matter... And here's why:

Once we've hit the bottom, we'll stay there; for a while... There won't be any upward movement in home prices, and there will still be enough distress situations that it will be difficult to estimate the exact value of homes in certain areas. Homeowners will still be walking away from their properties because they'll be so upside down that they see no other way out. Rents will continue to decline, forcing make-shift landlords into foreclosure, and you'll only know we were at the bottom in hindsight once the recovery starts. The ugly truth is there is still a long way to go, and government intervention will only prolong the inevitable, not prevent it.

So what if anything can you do?

Be smart. You'll hear the National Association of Realtors (NAR) claim time and again that the market is turning around, that sales are way up. The truth is, every summer sales will increase (even as home prices continue to dwindle), and every winter there will be huge price declines! So you may be growing weary of the rental you're in, but you may not want to buy yet!!! The time is not right.

If you own a home and you've been thinking about selling, then you've got a more difficult road ahead. For those who are not severely upside down in terms of loan to value ratio, there's no harm in attempting to sell!!! Prices will continue to fall, so if you can cut your losses, you should probably do so.

For those who are seriously upside down, if you can afford your mortgage, hang tight! One of the programs to help "save the homeowners" may be of help to you, but most of them require you to be in good standing with your mortgage! Keep making the payment, light may be at the end of the tunnel for you.

For those who are seriously upside down, and having difficulty affording your mortgage, work with your lender! Believe me, the lender doesn't want to go through the foreclosure process on your home anymore than you do. If  you've lost your job, or taken a pay cut call your lender and tell them about your situation. In some cases they can temporarily suspend your mortgage payments (although you may still be responsible for the interest, which will continue to accrue).

Finally, I'll leave you with one thought: No one can absolutely call the bottom as it is happening!!! Watch the signs, and you'll know when the time is right to act.