The current mortgage market.

There seems to be this misconception, mainly propagated by the mainstream media, that this is a “Buyers Market” which couldn’t be any more incorrect. You see, a Buyer’s Market actually refers to a trend where there is much more inventory on the market than there are Buyers to purchase them. In effect, Sellers actually start competing for qualified Buyers and typically try and attract those Buyers thru incentives and/or price reductions. But wait, this gets much more interesting because we’re not actually in a Seller’s Market either. A Seller’s Market describes a market where there are so many Buyers searching for homes that inventory shrinks and Buyers start competing for what’s left.

What we are currently in is what one could only refer to as an Auction. There are tons of properties on the market for sale, Sellers/Banks are demanding top dollar or refusing to sell, so the Buyers are only left with the option of being the highest bidder or losing out. Certainly this would resemble the market during the big refi and purchase boom from 2000 thru 2005, but that market was fueled more by aggressive Adjustable Rate Mortgages and Negative Amortization Loans, which allowed the Buyer to qualify for higher and higher Purchase Prices, while obtaining smaller and smaller interest rates thru these risky loans.

Our market today has none of these options, the 30 Year Fixed reigns supreme, and the typical Buyer quickly finds their Maximum Purchase Power and is then in for the roller coaster ride of their life. We caution our Buyers to develop thick skin, don’t get hung up on one property, and develop the patience of Job because they are truly going to have to fight tooth and nail to successfully out maneuver the competition. Lions, and Tigers, and Bears – Oh my!