Here are a few reports and surveys you may find interesting.-The KCM Crew
Trulia’s American Dream Survey
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We have been discussing home prices in this blog for over a year. The principle of ‘supply and demand’ has been our rallying cry for the entire duration. Pricing of any item is determined by the number of items for sale in ratio to the number of purchasers looking to buy that item.
Here is an industry guideline we have used:
It now appears that the National Association of Realtors (NAR) is letting their membership know that ‘supply and demand’ will determine house prices for the foreseeable future. In two separate reports released on Wednesday, NAR addressed the issue of both an increasing supply of homes for sale and a decreasing demand.
In Economic Commentary: Varying Signs, Lawrence Yun, NAR’s chief economist, speaks of the anticipated demand for housing for the rest of the year:
“One thing is clear, however: slow business spending will mean slow economic expansion and a slow pace of job creation. The frustration of traveling at 40 mph on a wide open 70 mph freeway will be with us for the foreseeable future if businesses continue to hold back. The unemployment rate could also remain stuck at a stubbornly high level — 9.5 to 10 percent. It also means that home sales in the second half of this year will be markedly slower than in the first half of 2010.” (emphasis added)
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While we still see a tightening of mortgage underwriting guidelines for many loan programs, or even an increase in costs associated with the FHA loan program, there has emerged an increased appetite for Jumbo Mortgages in the marketplace. Today, I’d like to discuss the “What?”, “Why?” and “How It Affects You?” of the evolving landscape.
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We are building a home for real estate information here at the KCM Blog. Our job is to accurately reflect what is taking place in the residential housing market in this country. The entire team takes this job very seriously. With the market evolving so rapidly, it has become a daunting task.
We looked at what certain experts were predicting about a possible double dip in housing yesterday. Today, we have compiled the thoughts of five industry players to help show where the experts think home prices are headed for the rest of this year and going into 2011.
Three of the major housing price indexes:
“The market, right now, is a veritable case study of the law of supply and demand. Right now, there’s a whole lot of supply, but very, very little demand. The buyers that drove a flurry of activity during the spring have left a deafening silence in their wake … Increases in inventory nationwide show that demand simply isn’t there. As the market continues to correct itself, and as we head into the seasonally weak fall and winter months, expect more increases in inventory, and likely deepening declines in asking prices.”
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The biggest question looming over the economy overall and real estate specifically is whether or not we will experience a double dip. What exactly is a double dip? Robert Hall, chairman of the National Bureau of Economic Research, a group of academic economists that officially declares the starts and ends of recessions, says:
“A double dip is akin to a continuous recession that’s punctuated by a period of growth, then followed by a further decline in the economy.”
We’ve had a recession followed by a period of growth. Are we headed for further decline in the economy? We’ll leave discussion of the overall economy to others.
We want to tackle what a double dip could mean to the real estate industry. Are we in store for another dramatic drop in housing values? As seems to be the case in every area of real estate today, there is no consensus. We’ll give you both arguments.
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I believe very strongly in the importance of homeownership in this country. A home is much more than just a financial investment. It is a parents’ investment in their children. It is a family’s investment in their community. It is the people’s investment in America.
I have written extensively on the fact that real estate is still one of the best long term investments available. There is plenty of evidence that people believe owning a home is more advantageous than renting. There is no doubt that homeowners are more committed to the community. Homeownership is an integral part of the fabric of this country.
Yet, there are still those that argue against these points. My fear is that people in power are listening to these naysayers; people in position to make decisions that will impact the ability of families to purchase a home. The percentage of homeownership has already fallen to the levels of 1999. And now it seems that some in government are questioning the actual concept of homeownership.
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We know how busy everyone is. For that reason, here are our 5 most popular blog posts from the last 30 days (just in case you missed any of them). Have a great weekend!
- The KCM Crew
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Here at the KCM Blog we attempt to bring clarity to a very confusing real estate market. There is news breaking every day and one report seems to contradict another. Today, we are going to take all the news available and put into a single graph. How do we propose to do that?
By cheating a little.
MacroMarkets is a company founded by Professor Robert Shiller of Case-Shiller fame. The company has assembled a distinguished panel of over 100 economists, investment strategists, and housing market analysts who they survey every month regarding the experts’ 5-year expectations for future home prices in the United States.
We decided that this group of experts does an extraordinary amount of research on the housing industry and that the culmination of their expectations would give a true picture of where the real estate market truly is, and will be, over the next five years.
We decided to graph this on a timeline so you can see how the ‘experts’ believe the market will perform. Below is a graph of the mean, cumulative home prices that the experts expect over the next five years.
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The original thinking was that the economy wouldn’t come back until there was a recovery in the housing market. It now seems that most experts are saying that there will be no recovery in the housing sector until our economy comes back. More specifically not until we begin creating jobs.
But, when will that actually happen? Even if the economy recovers, will jobs follow?
Just last week, CNBC reported:
Investors were shifting into and out of positions as evidence mounted that we may be looking at a jobless recovery.
And this week Real Trends, the bible of real estate brokerage stated:
Unless and until unemployment comes down housing sales will be stuck well below normal rates given the interest rates and home pricing available in the market today. Smarter experts than us have commented extensively on the relationship between employment, incomes and housing. Now the facts bear this out.
With many economists believing that unemployment will only recover slowly (one group says the rate will be at best 8.5% in the fourth quarter of 2011) this level of housing sales should be considered the “new normal”. While no one likes this news it should give all planners the ability to know with some certainty that there is likely no rescue on the way.
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You have decided to sell your home. You realize that, in this market, you need the skills of a real estate professional. You are about to start interviewing. You know what your goals are:
You wonder – What is the most important skill I should be looking for in an agent in order to accomplish these goals? The answer is simple.
The number one skill an agent can possess is the ability to negotiate in today’s extremely volatile real estate environment.
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SHI (shē) n. the spiral adopted by Keeping Current Matters that symbolizes the continuous change of real estate and its current practices.
