Archive for Housing Market
The State of Housing – Turning Lookers into Buyers
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Economists now estimate that housing prices will continue to drop through the middle of 2010, perhaps not bottoming until sometime in 2011. In a market that has seen substantial drops in value for the last 18 months, this is a continuance of bad news.
Worst yet, it will be years before you see any significant rebound in values, leaving many homeowners pondering their future. Housing inventories will remain high which keeps pressure on the prices to remain low. The housing collapse has cost more than 3.5 Trillion dollars, as reported for the end of 2008 and we now have 6 more months of losses to tack onto to that figure.
But in many parts of the country, home sales are starting to pick up. The flood of foreclosures and short-sales have allowed many potential buyers to actually get a nice home for tens of thousands of dollars less than just a year ago.
A Realtor friend of mine says that she shows a lot of properties, but most people are simply “lookers”, not really ready to purchase. For many, it’s like going to the movie, they leave home with a list of property appointments, knowing that they are simply looking with no intent to purchase at this time. One of her clients even admitted to looking at houses as a pastime, a hobby.
So, how do you turn those lookers into buyers and is it now time to seriously consider buying?
“No”, say many economists sighting the low interest rates. Â They state that it is the absolute worst time to buy when interest rates are down, because in this market climate the rates have nowhere to go but up which means that the prices will continue to go down. Buying when the interest rates are down is a mistake.
Fantastic deals have be known to appear however. I know of a particular house that listed for well over $450,000 last year that sold recently for $344,900. That’s a drastic difference in price. Of course, the value of that home won’t move much for the next 5 years or more, but you make your money up front with real estate anyhow.
If you have not purchased a home in the last 3 years, you are considered a “first-time homebuyer” and qualify for an $8,000 tax credit. The FHA now permits you to use this tax credit toward a larger down payment or apply it to the closing costs.
There are many incentives to buy now, as the Obama Administration and the banking industry have come up with numerous programs in hopes of stimulating this market gone bust. The annual price appreciation reported for the first quarter of 2009 stands at a negative 82% (HouseHunt.com), certainly not an indicator of better times just around the corner.
A surge in sales is what is hoped for, but it remains a tough marketplace with values continuing to fall. Consider this, you put down 10% on a home and the value then falls 10%. You’ve just lost 100% of your down payment money. You’ll get it back eventually, but that will be years in the making. This is why many don’t want to buy until prices stabilize or settle on the bottom.
So it appears that turning lookers into buyers continues to be a very difficult task. It also appears that this market condition will not turn around for some time yet.
This disaster was many years in the making, and it will be many years returning to a stable environment.
Foreclosures – The Next Wave
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The housing market had taken a little bit of a back seat to the news in general across this country. There have been reports of a “light at the end of the tunnel” and a slowing of the rate at of decline, but are things really getting better?
The number of reported foreclosures, according to RealtyTrac.com has risen by 18% in May of 2009. That’s 1800 houses for every 10,000 across this great nation. Many parts of the country have seen a rate less than this, but on average there are still tons of houses in the pipeline that will adversely affect our economy.
California for instance, has imposed a 90-day moratorium on all foreclosures. This new law will make lenders prove that they’ve done all that they could to keep homeowners in their homes. Shamefully, a law is needed to force those who can really help, do just that.
You’ve seen extraordinary measures taken to rescue the housing market, which many believe is the root of what ails the economy overall. What a mess this turned out to be, and all because of corporate greed, allowed to creep in due a lack of solid regulation.
The Mortgage Bankers Association has reported a level of delinquencies not seen since 1972, a good number of which will run out the entire foreclosure clock, which means another wave of foreclosures is likely on the horizon. High level decisions will have to be made to stem the tide once again.
The federal moratorium rolled out in December has expired (April 1), but many lenders have continued to aggressively rework terms of mortgage loans.
Speaking with a friend of mine who considers herself an industry insider, I learned that it is likely so many defaults in the pipeline that it will be many months clearing them out once the intake slowed to a somewhat normal pace.
With the tremendous numbers of job losses, there will be many more homes headed for the ranks of misfortune, necessitating a continuance of programs to help people retain their most valuable asset.
Just because the housing crash has fallen from the top headlines for a moment, don’t be lured into thinking we’ve rounded the corner. A bumpy road still lies ahead for the housing industry in general.
The foreclosures of this next wave will have many grousing that the measures taken by the government and lenders thus far are failing, but what we will really be seeing is a system practically strangled by overwhelming numbers.
All in all, we’ll have to ride this one out for months to come and hope some measure of progress begins to show in the second half of this year.
After all, no one should be without a home in this great nation.
