Has the real estate market nationwide hit bottom? I hear Realtors all the time say that business is picking up for them. In addition, I was looking through the New York Times Real Estate section, and not one article in the 18+ articles posted was negative. Not one article was telling of how we are all doomed to suffer endless real estate woes for the next million years or that prices have dropped again for the umpteenth time.
The National Association of Realtors is predicting a “notable improvement” in the real estate market in the second half of 2008. Lawrence Yun, cheif economist for the NAR, said “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”
Credit should be more available, but is a loan on a home easy to get right now? I’m in the process of a refinance; I qualify full doc now with FHA, whereas two years ago I did not. This translates to a savings of over 2% or a few hundred dollars a month. However I’m having a problem with the appraisal. It came back $1000 short of where it needs to be for the 97% LTV, and I’m not taking out any cash. The big problem is, I put $15,000 down when I bought it two years ago and put $10,000 into it since. We thought we were getting a deal at the time, guess not.
Back to the point, I’ll post more details on my refi when it either completely falls through of closes.
NAR is estimating fourth quarter sales to be up at around 5.9 million, up from 4.9 million in the first quarter.
New home sales and housing starts are expected to fall 25.7% and 26.3% respectively and the new home median price to fall to $238,400 in 2008, but projected to rise 4% in 2009.
The only negative real estate article that I found on USAToday > Real Estate was an article speaking into the market’s decline three months in a row, posted in February.
Have we finally made it to the bottom? Are we flattening out, officially arriving at the back end of the slump? Is the worst over?
About this time last year, we were all saying we still needed to see all the foreclosures come through. At that time, there were still tons of owners still holding on. Foreclosure rates are high now, up 60% in February compared to February 2007. Foreclosure rates are down in February 2008, however, from January 2008 4%, but this is just a seasonal decline according to Rick Sharga, a RealtyTrac spokesman as quoted on CNNMoney.com. I expect the foreclosure rates to stay fairly high for a while, but has the flushing began? Will the foreclosure rate plateau and start to gradually fall? I think it is too early to tell, but I think we’ll know in a matter of months.
I was telling my dad the other day that we won’t wake up one day, look out the window and notice the housing downturn is over. It may be years before we’ll stroll into the office and realize that things have been going pretty good for quite a while. These things take lots of time to work themselves out and I’m looking for things to stabilize in the next year and in 2009 to be able to start seeing some noticeable real estate product sales. My company has a project in the Keys that has 2 homes sold in the last 60 days and 4 other deals in the works. The difference in the buyer now compared to a couple of years ago is that these are end-user/lifestyle buyers. They are not buying to rent, hold-then-flip, etc. They want to use their new homes. Another distinguishing difference is that we have new completed product. The community is under construction, but the first phase (13 homes) have just been completed and all the amenities are already in place, waiting to be used. If there was nothing there, I feel confident we would have no sales to speak of.
I think it is safe to say, we’re getting through this; the market downturn, that is. And, if you have money to spend, you better be buying right now. In five years, you’ll wish you had. Me? I’m working on it. Being in the real estate business, I’m not exactly loaded right now, but I’ve got a plan that will add more real estate to my portfolio in the next two years. Plus, I’m fortunate to not be holding multiple homes purchased two and three years ago. I know many who are, and I can’t say that I feel your pain, but I know you’re hurting right now. Hang in there, we’re almost done.