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Real estate “hot zones” are not immune to current market trends

Real Estate “hot Zones” are not Immune to Current Market Trends

Up till now, it seemed as if certain real estate markets would come through the real estate market crash unscathed. Home prices in these areas continued to rise and sales were happening rather quickly. However, there are now signs that even hot markets like the one in Provo, Utah are not immune to the market crash. Homes in these areas that would have been snatched up a short while ago are now sitting on the market with no buyers in sight.

In 2006, home values started decreasing in most markets. But not all markets were cooling. Provo, for example, experienced a 14% hike in home values within a short period of time while other markets were tanking.

Homeowners who lived in these hot market zones realized the full effects of the crash when they tried to sell their homes. Homes that usually sold within a few weeks in the past were sitting for months. It did not take long for sellers to realize that they had to do something drastic to attract buyers. So they started slashing their prices and offering discounts to buyers who would buy their home without an agent. This cut back on the commission fees that sellers had to pay and they could pass this savings to the buyer.

The message that these communities learned is one that we should all pay attention to. No market is immune to the housing bust. Even in markets where prices are continuing to rise, the appreciation is not as robust as it has been in the past. These markets are in the beginning cooling stages. Strict loan restrictions are not doing anything to help sellers sell their properties either.

Surprisingly, the economy in many of these areas has remained strong. This only points to the fact that the housing market and the local economy are not always intertwined.

Another once hot market that appears to be cooling is Seattle. In the Seattle market, prices are not rising as quickly as they once did. Homes are also sitting on the market longer than they used to. Foreclosure rates are on the rise as well.

Experts are still predicting that Seattle should be able to carry on through the crash. Apartment values in the city remain quite strong. Inventory is high, but sales volumes are keeping pace.

Not only has Seattle been able to hold on, the state of Washington as a whole has been able to do relatively well. Why? The state adopted the Growth Management Act which limited the amount of construction projects in the state. Other states were building at a much too rapid rate which has left many new properties empty.

This Act was an extreme plus for Seattle and Washington State. Other states were not so fortunate. New construction projects were left half finished or finished and empty. This resulted in a large number of defaulted construction loans.

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