There are wide economic factors that drive interest rates and a number of economists on a recent NPR program feel that as inflation begins to appear interests rates will rise. A 1% change in interest rates can make a difference in the price range that a buyer afford. Below is a table that shows the impact a 1%  interest rate increase can have in the monthly payments on a  30 year mortgage.

With this information in mind we are suggesting that any prospective home buyers who have been considering making a move do so now to take advantage of the affordability of Cincinnati’s current real estate market, the low interest rates, and the $8,000 tax credit for first time home buyers.

Their research shows a slight drop from 84,534 to 84,291 in the number of properties repossessed by lenders following foreclosure November over October. But that’s off nearly 21% from September’s 106,415 REO filings.  In California  Foreclosure Index numbers show REO filings in the state down to 15,978 in November. That is a decrease of 6.55% from October and off nearly 50% from September.

The hope is that as these foreclosure rates slow there will be fewer foreclosed homes on the market, which will help stabilize home values.  The article however does not take into account the overarching economic slow down. Although the major real estate challenges of 207-2008 are being resolved, I’m not sure if there is an eminent rebound. The Cincinnati real estate market remains relatively steady, with prices across the board lower than a few years ago and activity levels down as well. Our real estate values did not balloon like Florida, Arizona and California so subsequently we did not experience, for the most part, the bubble bursting.

So here is Home Predict, website that is allowing people from all over predict the value of homes and neighborhoods. What is important is that market value is a function of the Wisdom of Crowds. If 90 of 100 people think that a neighborhood’s average home is worth $200,000 it is good bet that as a buyer you should be looking to pay about that much, and as a seller it would be wise to list it as such.

In the market boom what we saw collectively was a skewing of the perception of value. We all thought homes were worth more, and therefore the price tags went up. Now as the market cools, and the economy slows we collectively are correcting our perception. Potential buyer’s value perception are the most important information to have, but a community wide poll would probably return similar results. I’d like to see a group of us getting on and helping to set the value of our homes and real estate here in Cincinnati.