Time to buy a home? Now, says Barbara Corcoran
"What you have here are the good old days that we were all talking about for 20 years," says real estate magnate Barbara Corcoran. "You have cheap money, 4.5 percent for a fixed-rate mortgage, and you have prices that are 40% cheaper than they were before." Corcoran told MoneyWatch that the residential real estate market looks very attractive right now, but potential buyers are too pessimistic to take advantage.
A combination of pessimistic housing figures, the expiration of the home-buyer tax credit, and difficultly of securing credit have weighed on the market and consumer confidence, says CBS economic correspondent Rebecca Jarvis. According to the National Association of Realtors, there is a glut of housing: 3.72 millions houses are on the market, and that doesn't include the "shadow inventory" of foreclosed homes that haven't hit the market.
Corcoran, who parlayed s $1,000 loan into a $5 billion real estate business, says that we tend to focus on the bad news, while ignoring signs of recovery. "What happens in neighborhoods is that negative news grabs a headline, but nobody is talking about the 20 percent of the market that, despite all odds, is turning around and appreciated in price."
To find a neighborhood on the verge of recovery, Corcoran says, pay attention to the little offbeat things that will give you an edge over the other buyers.
- Less bad news: "You can take a drive and see if there are fewer than three foreclosure signs within a 10 block radius. The minute those foreclosure signs become less, you should be buying."
- Shiny subcompacts: "Look for brand-new cheap cars. Because if you see them on the street, young people are moving in."
- Overachievers: "If SAT scores are going up in any local area, you can bet your bottom dollar that prices are starting to go up as well."
As for advice to potential buyers, Corcoran advises against trying to nail the precise bottom of the market. "Everybody thinks that they're going to time the market, they're going to sharpshoot the market, and buy right at the bottom. The truth of the matter is that nobody is good at it. I've been in real estate for my whole life, I've been trying to sharpshoot the market with my investments, I'm never right. All you need to do is get near the bottom. That's good enough. What we are in now is near the bottom."
"A funny thing happens in real estate," she adds with a grin, "when it comes back, it comes back up like gangbusters."
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