There a few topics being reported by the media recently and we have been asked about as real estate professionals as well. One is “is there going to be a double dip in housing prices?” another is “has your market hit bottom and how can you tell?”, “where are the foreclosures?” and “what do you see is happening in the market?”
Let’s answer these one at a time. First, is there going to be a double dip in housing prices? The answer is yes and no. It depends upon where you live. If your area continues to lose jobs, houses continue to languish on the market, foreclosed properties and short sales dominate your housing sale’s landscape, yes your market has a very good chance of seeing a double dip in housing prices because, unfortunately, these are all recipes for housing price declines. As a nation, we have seen the overall housing prices drop 33% from their highs which is even worse than the depression era when housing prices decreased 31%. Conversely, if you have job growth, brisk housing sales, and the housing market is not riddled with distressed properties, you will see stable to increasing prices. It is a simple formula – jobs equal a strong housing market, no jobs equals a lousy housing market and consequently price declines.
The next one is, “has your market hit bottom and how can you tell?” This one can be answered very much like the first one. Are jobs coming back or have layoffs stopped? Are people moving back into your area? Are sale signs turning to sold signs? How are the inventory levels on houses for sale? With this question, be sure to take careful consideration of whether the houses were removed from the market or actually sold. How are the days on the market? What is the month supply of houses? If these areas mentioned are flat or decreasing, you have seen the bottom or are getting close to it. You are almost there if you are not already.
The last one is more difficult to answer, “Where are the foreclosures?” We have been told on numerous occasions that banks are sitting on inventory waiting to release them on the market but fail to do so because they don’t want to take the losses on their books all at one time. We have heard stories of the foreclosure process taking in excess of 400 days in certain states and evictions in others taking up to 900 days. There are in excess of 6.5 million people 30 days late or more on their mortgages. We don’t know how many will cure, how many will default or even specifically where they are but it has been reported that a majority of them are in the sand states. The sand states make up Nevada, Arizona, California, and Florida.
Most everyone you hear from in the media, speak with or read about all concur that we need the housing market to come back so the economy can recover fully. It seems to be a growing consensus amongst our Realtors that the media needs to help grow consumer confidence in the housing market and get the economy back on track. In one of my upcoming blogs, we will discuss mortgage reform and its impact on the housing recovery.
It is time to understand the housing market so you can intelligently discuss this with clients, acquaintances, and others you meet. Get it? Got it? Good!
Now, go sell something!