By Erica Elliott
Lately, when I tell people I meet that I work in real estate, they respond with a sympathetic look and mutter some kind of apology for the current state of the market.
People of Huntsville, this has got to stop.

Everyone has been brainwashed by fear-provoking media headlines about real estate: “Home Prices Crash!”, “Overall Sales Take Devastating Downturn!”, “Real Estate Recession!”. Even if the real estate market was truly in as tragic a condition as people think, we’re all forgetting one thing – Huntsville is unique.

The city of Huntsville seems to be the exception to the rule in many cases, and the real estate market is no different. I’d like to take a moment to dispel a few real estate myths to prevent a dangerous misconception from becoming a reality.

Myth #1: Home prices are drastically down, causing sellers to lose their equity.
Reality: According to the North Alabama Multiple Listing Service (NALMLS), average home prices in the Huntsville/Madison area have increased over five percent since 2006, and almost 20 percent since 2004.

Myth #2: The overall number of home sales has decreased.
Reality: From 2006 to 2007, the number of home sales has indeed dropped. By two percent. This number is hardly alarming when compared with the overall picture of home sales since 2004, which has increased by 18.5 percent.

Myth #3: The Huntsville real estate market is down, paralleling national real estate trends.
Reality: The dollar volume of sold listings has increased four percent from 2006, 17 percent since 2005, and 45.4 percent from 2004. This is not exactly the recession that everyone fears it to be.
Now that we’ve unveiled the truth about the Huntsville real estate market, let’s take a moment to address one other area of popular concern: the subprime mortgage market.

The “collapse” of subprime lending has garnered much attention, making potential buyers question their ability to qualify for a home loan. What kind of person generally applies for a subprime loan? The kind that cannot qualify for a conventional loan. Oftentimes, those applying for subprime loans have credit scores below 620. How does one get a credit score below 620? One easy way is to fall into debt. If you fall into, or are already in debt, how easy is it to make your extremely high interest payments on your subprime loan?

Subprime lenders made their money by offering high interest loans to people who traditionally could not qualify for homeownership, often based on the previously stated fact that they – that’s right – don’t pay their bills. What made anyone think that for these people, their mortgage would be different? This is a game of risk for those lenders, which eventually burned them. The instability of the subprime concept should have been a heads-up to someone this game couldn’t go on forever.

So, what percentage of mortgages does the subprime market comprise? According to Freddie Mac, about five percent. The supposed trouble is that so many of these subprime borrowers are defaulting on their mortgages, right? What percentage of these borrowers are delinquent? In the second quarter of this year, the delinquency rate was 14.82 percent. So in reality, there is a “crisis” among 14.82 percent of five percent of borrowers. This comes out to less than one percent of all homeowners. 0.7 percent to be exact. A greater percentage of the population voted for Dennis Kucinich in the 2004 Presidential primary – now that’s a crisis.

So what does all this mean for Huntsville? It depends. If everyone continues to run around in Chicken Little-fashion, bemoaning the fall of the sky, this lunacy will indeed materialize into a lack of buyer confidence, potentially triggering an actual decline in the real estate market. How do we stop this? Pick up the phone right now and call five people to tell them the great news about Huntsville real estate.