Reverse migration patterns are stacking the deck in buyers' favor in some housing markets.
A spillover effect from hot markets spread sellers' joy to more affordable areas outside big boom markets years ago, but created affordability issues where migration occurred.
California sent buyers to Nevada and other Western states; Washington, D.C. sent buyers as far out as West Virginia, for example.
Now, based on U.S. Census figures, a reversal of that pattern is leaving behind sufficient inventories to allow those areas to maintain a supply of affordable homes and their status as more balanced or "normal" markets.
"The D.C. region has, in short, become a microcosm of the nation's reaction to the housing bust. Like in Nevada and Arizona, the market for the region's suburban buyers is drying up due to the credit crunch, and construction and in-migration is stalling," according to Brookings Institution's "Housing Bust Shatters State Migration Patterns".
For buyers, "normal" means they don't hold all the cards, but the deck is stacked in their favor.
Here's how to get a winning hand without bluffing.
Learn the game. Obtaining general knowledge about the home-buying process and the real estate market is a relatively easy task. A glut of information available on the Internet, from free real estate industry-sponsored seminars and workshops, and through a vast library of real estate guide books, can give you a real edge.
Check the table. Real estate markets are local. That means so is a buyers' market. It can be designated by a small community, larger region or greater geographic area. A buyers' market is typically spotty, occurring in some neighborhoods and not others, or first in one area and then spreading to others. In any event, a buyers' market tends to include high inventories, slow appreciation, flat or falling prices and more sellers than buyers. The area might also suffer from general economic distress. Part of your homework should include learning the boundaries of your buyers' market. The larger the area, the greater your bargaining power.
Don't deal from the bottom of the deck. In a buyers' market, buyers who don't educate themselves about prices and markets tend to low-ball sellers and ask for too many concessions. Even in a buyers' market, that will only alienate the seller, especially those less motivated with top-value homes. The seller will simply look elsewhere for a more reasonable buyer.
Don't give away your hand. Paying sellers' market prices in a buyers' market is a common mistake buyers make, especially at the onset of a buyers' market. The mistake could leave you with a home that immediately loses value. Home buyers should make the same price checks a seller makes to price it right -- get comparables, track sale prices in your shopping area, use the local newspaper, online listing and for-sale sites and other sources, to keep tabs on asking prices. Also visit open houses. Use a real estate agent schooled in the history of market trends and statistics.
Play smart. Buy the least expensive house on the best block. Buy into the least expensive neighborhood in the best community. Buy into the least expensive city in the best region. The cheapest home in a neighborhood, community or region in transition will give you the greatest return on your investment, especially when the market rebounds.
Play with a full deck. Don't let a false sense of power overcome you. Even motivated sellers aren't going to wait around for your money to show up. Get your credit report checked and in order. Get your loan preapproved. Lock in your mortgage rate. Don't shop for a home without them.
Play for keeps. Buy because you need a home, not because it's a buyers' market. Buy with plans to stay put for a while and enjoy the appreciation end of your investment. It's also a keepers' market.
"We're at the beginning of a leveling off of migration between unaffordable and affordable America. As with the broader economy, we don't know how much longer it will last," Brookings reported.
