Realtors advise that now really is the time to buy

By Mary Garrison
Tribune-Courier Reporter
mgarrison@tribunecourier.com

MARSHALL COUNTY — The national news continues to paint a picture of doom and gloom on the housing market in the U.S. However, local realtors say that a closer look at the market in Marshall and the surrounding counties suggests it remains unaffected by national woes.

“The housing bubble is generated mainly in the coastal areas,” said Sissy Wommack, realtor for Century 21 of Gilbertsville. “Property is so much harder to come by, people will actually get into bidding wars that drive the prices up exponentially.”

Wommack said this is known as a “seller’s market.” However, the problem that stems from bidding wars and hot market areas comes once closing is done.

“The buyer then becomes responsible for a much larger payment than what they can handle,” Wommack said. “What’s worse is that when the bottom drops out of the market, they can’t sell the home for what they need to compensate the cost, either.”

And when prices of homes begin to exceed the income growth of the typical homeowner, it often leads to foreclosure.

“Everything sounds just awful for the housing market when you listen to the news at night,” Wommack said. “It isn’t so here, though. Kentucky tends to lag behind national economic trends just a bit, which doesn’t necessarily sound good, but when the national economy is in a slump, we’re often less vulnerable.”

Russ Randall, owner of Park Avenue Properties in Draffenville, agreed, stating that despite national news pointing to the contrary, 2007 was a very good business year.

“I think a lot of it has to do with the fact that people in this area are much more conservative in their financial and real estate decisions,” Randall said. “They aren’t as susceptible to predatory lending practices such as those found in the sub-prime market.”

The sub-prime housing market targets people who are often unable to secure a mortgage through conventional lending practices with fixed interest rates.

“Many of these people fall victim to interest-only loans and other unconventional lending methods,” Becky Ray, realtor for Park Avenue Properties said. “We just don’t deal in much of that here. We have very few adjustable rate mortgages, for that matter.”

Local financial institutions seem to be following the same trend, too. According to information provided by Gary Smith, Executive Vice-President and chief lending officer for Community Financial Services Bank, foreclosure rates have actually gone down in their establishment since 2006.

“Our own area is not nearly as affected by the economic downturn in the country,” Smith said, concurring with statements given by Wommack, Randall and Ray. “I can’t speak for other financial institutions in the area, but 2007 was one of the best years we’ve had.”

In 2007, Kentucky was ranked 35th in the nation in its foreclosure rates and, according to a press release submitted by the Kentucky Barkley Lakes Board of Realtors, well below the national average.

“For one thing, housing in the area is very affordable when compared to many parts of the country, and most community banks tend to avoid exotic lending practices,” Smith said. “When you take these things into account, it bodes well for the market in our region.”

A market that by all outward appearances seems stable. According to the master list price comparison report provided by Ray and the Kentucky Barkley Lakes Board of Realtors, in Marshall County between 2006 and 2007 the average number of days a home sat on the market fluctuated by only one day, going from 129 days in 2006 to 128 days in 2007.

The average price of homes on the market in the county did increase, however, going from $120,266 in 2006 to $132,871 in 2007.

Comparatively, the Marshall County market falls right in line with the 13-county region serviced by the Kentucky Barkley Lakes Board of Realtors. Region-wide in 2006, the average price of homes on the market was $120,392, spending an average of 124 days on the market. In 2007, the average cost of homes on the market totaled $125,313 and spent an average of 134 days listed with realtors.

“Buyers and sellers must remember that all real estate is local,” said Diana Stubblefield, president of the Board of Realtors. “Not just on a state level, but also in the communities within the state, and in some cases, the neighborhoods within those communities.”

And now that the Federal Reserve has cut interest rates twice in recent weeks, many realtors, brokers and lenders in the area suggest that now is “the time to buy.”

However, sources also advise people to use caution when exercising these decisions to avoid the pitfalls that lead to foreclosures.

“People need to realize that just because they are approved for ”x” amount of dollars in a loan, doesn’t always mean they should buy a home for the full amount of that loan,” Ray said. “Having a payment they are completely comfortable with is important.”

“An emergency fund is always a good idea, as well,” Randall suggested. “You just never know when something could happen to compromise your financial situation.”

Wommack advised first and foremost to find a good realtor that will negotiate for the best interest rates when securing a loan.

“A good realtor will also tell a person when what they are looking for is simply out of their reach,” Wommack said. “My best advice to people is to listen to what their realtor and lenders tell them, and to really consider their financial situation to avoid getting in over their heads.”

Communicating with lenders is perhaps the simplest and best way to avoid foreclosure when trouble arises, though, Smith said.

“Many times there are simply situations that you can’t avoid which will put you in a financial bind,” Smith said. “However, if people will just take the time to communicate with their lenders, often foreclosure can be avoided. We have a ‘work-out’ program at CFSB specifically for working with borrowers to reach an arrangement that will benefit both of us. We’re not in the business of owning real-estate, and neither is any other lender. We don’t want to take anyone’s home, and you’d be surprised at how easy it might be to avoid that if those in trouble would just talk to us.”