A little good news about real estate
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| By Craig Guillot • Bankrate.com |
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It may still have to get worse before it gets better, but the residential real estate market shows signs that demand is building and home values may start recovering in 2008.
It seems there's bad news for the housing market every
day: More mortgage resets are coming in the next year, lenders are
tightening standards and homes continue to pour onto the market.
All point to sinking home values in the near future.
There are plenty of statistics to warrant a gloomy
outlook.
The National Association of Realtors says existing
single-family home sales dropped 8.6 percent to a seasonally adjusted
annual rate of 4.38 million in September, compared to a pace of
4.79 million in August. That rate is 19.8 percent below the 5.46
million-unit pace from September 2006. What's more, the median existing
single-family home price was $210,200 in September, down 4.9 percent
from the same time last year.
Good news, bad news
But there are also some encouraging signs. Lawrence Yun, chief economist
for the National Association of Realtors, or NAR, believes home values
may start recovering next year because significant demand has been
accumulating. He says prices actually continue to trend upward in
the Northeast, Midwest, throughout the condo sector and in areas
that are not dependent on jumbo loans.
In the past two years, Yun says, more than 4 million
new jobs have been created, wages have been rising and Americans
accumulated $4 trillion in wealth through the stock market. He says
that many people who may have been priced out of the market haven't
yet returned due to a lack of confidence and a continuing bad news.
“In the past two years more than 4 million new jobs have been created, wages have been rising and that Americans accumulated $4 trillion in wealth through the stock market.”
"Many people may just be wondering if it is better
to buy later rather than now. Whether that is now or later, buyers
are (and will be) able to re-enter the market at a more attractive
price and a much larger selection of inventory," says Yun. "Mortgage
rates are still favorable."
Slashing prices
As desperate sellers are forced to cut their asking
prices and as home builders slash prices to get rid of excess inventory,
Yun feels it is inevitable that some of those bargain shoppers will
jump at offers and, in turn, slowly put upward pressure on sales
and prices.
An early indicator that such a trend may be underway
came in September 2007 when, the Commerce Department reported, sales
of new single-family homes actually rose 4.8 percent with a revised
annual rate of 770,000 compared to a rate of 735,000 in August 2007,
despite a drop in the median sales price of new homes from $232,100
to $230,000 from August through September.
NAR data from the second quarter of 2007 actually
shows price increases in 97 of the 149 metropolitan statistical
areas. Because high-population areas such as Florida, Nevada and
California have led the downturn, it sometimes masks the fact that
the overall market has remained stable throughout most of the country.
Yun says Utah has still seen growth and believes Texas
is ripe for price gains because of the strong job growth. Much of
the South -- except for Florida -- has remained stable. With declining
inventories, he also expects Denver and Boston to switch to positive
pricing in the near future.
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