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June 2010 Newsletter

IT'S EASY TO TWIST THINGS AROUND

No one can deny the housing market has recently been through tough times. Although the situation is improving, some news media reports still distort and exaggerate the industry's problems by focusing on the most negative aspects of the current situation. The good news --- rising home sales, improved affordability, historically low interest rates and government incentives --- are frequently buried behind the front-page predictions of doom and gloom.

The forecasts of disaster fail to mention that real estate values run in cycles. For people who are planning to own their home for more than five years, the risks of selling at a loss are relatively small. Over the long term, home prices generally rise, making home ownership an excellent long-term investment.

Home ownership remains the Great American Dream. Buying a home and building equity is still the chief means of creating wealth for most people.

It's true the recent downturn has forced real estate investors to recalibrate their expectations. Those owners who purchased near the peak of the market may have seen value dip below their purchase price, but that value will eventually return. Prudent buyers are now finding great purchase values that will also pay off in the long run.

Fear makes headlines, which means the good news about the real estate market can only be found deep inside your newspaper, usually masked behind intimidating headlines. For example, on October 28, 2009, the New York Times carried a story with a headline that read, "Fears of a New Chill in Home Sales".

The first paragraph said there was cause to believe the market would be severely tested over the winter. It quoted an economist who expected "plenty of pain to come". However, if you read to the end of the story you learned that one of the creators of the Case-Shiller home price index thought that the housing market already had reached bottom and that housing was as affordable as it had been in the last 20 years.

The same news story noted that September 2009 sales of existing homes in the U.S. were up 9.4% from the previous month. As you can see, the problem was that the positive news was buried so deep in the story that the information could have been easily missed.

On November 24, 2009 a story in the Wall Street Journal carried the headline, "1 in 4 Borrowers Under Water", meaning that their homes were currently worth less than what they had paid for them. Five paragraphs into the story, the author revealed that most U.S. homeowners still had home equity and nearly 24 million owner-occupied homes don't even have a mortgage to pay off.

Do you see a pattern? The news media has a way of making good news sound bad. It's no wonder why real estate professionals like myself can become frustrated when we see how the press is covering our industry.

My advice to you is to be skeptical. If you really want to know what is happening in the Sedona market, let me provide you with a clear, concise and up-to-date picture. One thing I can assure you --- you will discover a lot more real estate positives than you will find in the news media.

You can E-mail me at Lee@LeeCongdon.com or call me at 928-300-5050.

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