This is a two part blog post:

Part one: Is the Great Housing Bust Finally Over?.

Part two: When will homes be worth what they were in 2006-2007?

Part one: Is the Great Housing Bust Finally Over.....?

Expect many conflicting news reports over the next few months about this topic.

What you need to know now....

THE most important issue facing housing is the simple fact that the banks are ‘holding onto’ 5,000,000 homes. Thats 5 million...check the zeros. The so-called 'Shadow Inventory' is coming for sale now. Expect to see the the number of homes for sale more than double between now and late spring 2010...

Allow me to put this into perspective...

NATIONALLY, right now...today.... there are roughly 4,000,000 homes for sale. Once the banks release all of their listings...the national inventory of homes for sale will be...9,000,000 homes! (Yes, you read that correctly...)

Some expect the banks to release all of their inventory between now and the end of the year...to 'get the toxic-asset' homes off their books'. Here is a video from CNBC, what is happening next in housing

Next, adding to the confusion are the expected rising defaults due to the ALT-A mortgages resetting….that means upper-end homes will be going into foreclosures at higher rates than we experienced even with the sub-prime mess. These new distressed listings are not accounted for in the estimates of homes coming for sale. In other words....its going to be more than 9,000,000...

And the big one…Commercial Real Estate. Have you noticed all those commercial vacancies? When these loans start going bad expect to see many more bank failures...

The FDIC has 100’s of banks on their ‘Watch List’. Recently Shiela Biard the chair of the FDIC said she is expecting to see a huge increase in the number of commercial loan defaults.  Our commercial broker coaching clients have been telling us that the commercial problem is going to be far bigger…far more significant than what is being reported.

Bottom line, be prepared. Please don't hide your head in the sand and ignore the actions needed to not just survive this market...but, thrive in this market.

Not sure what to do now? (you aren't alone)

If you know that the market is headed towards more foreclosures (and more REO listings as a result) it simply makes sense that you would do whatever it takes to become an REO listing agent as soon as possible.

We have made it easy for you.

Listen NOW to the FREE Replay of the most recent Agent REO Secrets teleconference. This is an intense, 90 minute educational call where you will learn exactly how to become an REO listing agent. Listen NOW.

Now, let me share with you a little good news...

Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September. Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.

These signs — as well as anecdotal reports about house shoppers growing more willing to write a deposit check — have executives at homebuilding firms declaring the worst is over.

“We believe declining cancellations and more solid demand indicate that the housing market is stabilizing,” Toll Brothers chief executive officer Bob Toll said this month in a conference call with investors and analysts.

Haven't we heard all of this before?........

Housing boosters have forecast turnarounds repeatedly since the market peaked in 2006, only to be proven wrong by plunging prices. And skeptics say they’re wrong again now.

They argue that a deeply indebted consumer, a weak job market, expiring incentives and rising foreclosures spell a quick end to any housing rebound.

“We’re entering the phase where the homeowner has to earn his way out of this mess,” said Mark Hanson, who runs a California real estate research firm. “This summer is shaping up as the gateway into the next move down.”

Realtors, did you read that last section? There is a massive…5,000,000 home strong….foreclosure wave coming NOW. Its NOT too late for you to become an REO Listing Agent. Do this, watch the Agent REO Secrets video…next, download the free how-to list REOs book

Part 2:

When Will Homes Be Worth 2006-2007 Values?

Every week we receive literally hundreds of questions from HREU Students…(and future students). We welcome all questions and are happy to help.

(Would you like to schedule a FREE Coaching Call with a Harris Real Estate University coach? Go here now.)

Here is the Question Of The Week:

“Dear Tim and Julie,

In my real estate market homes have depreciated more than 20%….in some markets homes are worth 30%+ less than they were worth only a few years ago! Matter of fact my own home is now worth far less than I paid for it in 2006. Everyday I come across sellers who are in the same position as me. Just today, I met with a seller who was $200,000 upside down in their home. The seller asked me if it made any sense for them to simply..’wait it out’ for the market to come back…

So, my question is..how long will it take for homes to be worth what they were in 2006-2007?….in other words…when will home values truly recover?”

Tim and Julie’s response:

The simple answers are…. years (and never).

As in 10-20 years depending on your market. In some markets the homes will never be worth what they were in 2006-2007. The idea that homes don’t appreciate is a new concept for most of the country. But, the reality is in many parts of the country….there will never be a housing recovery in the true sense of the words. Homes were artificially valued based on once in a lifetime circumstances.

Lets use this recent article from the Orange County Register…using Southern California as an example:

An economist at the Moody’s credit-rating agency has a new report out saying that you better not hold your breath waiting for a quick return to peak pricing for housing in California.
Economist Celia Chen thinks California pricing won’t regain its old peak before 2030. We decided to try to put that into perspective with the help of our trusty spreadsheet and some DataQuick data.

If annual gains were: New peak In months

3%	Oct 2027	226
4%	Mar 2023	170
5%	May 2020	137
6%	July 2018	114
7%	Mar 2017	99
8%	Mar 2016	87
9%	Jun 2015	77
10%	Nov 2014	70
15%	Dec 2012	48
20%	Jan 2012	37
25%	July 2011	30

Let’s look at Chen’s call in Orange County terms. If she nails that 2030 prediction, that will mean that local housing will average annual gains of 2.7% percent for the next 21 years from January’s cyclical median-price low of $370,000. Let’s say those are slim profits. Compare that to other historic upticks for Orange County’s median selling price …

• 3.6% — Annualized gain made in the 20 years ended in July. Curiously, price have exactly doubled since July 1989, amid another great buying frenzy that ended badly.
• 8.5% — Annualized gain from the bounce from last cycle’s bottom (January 1996) to new peak (April 1998.)
• 11.7% — Annualized gains generated from the 1996 bottom of the last housing downturn to the June 2007 peak of $645,000!
• 17.6% — Highest average annual return in a 5-year period in DataQuick’s records. (60 months ended March ‘06)
• 20.8% — Highest average annual return in a 3-year period in DataQuick’s records. (36 months ended Feb. ‘05)

Want to make your own prediction, based on expected yearly profits going forward? See the chart at right that mixes annual rates of housing gains and when they rate would bring Orange County back to its June 2007’s peak of $645,000!

Listen NOW to the FREE Replay of the most recent Agent REO Secrets teleconference. This is an intense 90 minute educational call where you will learn exactly how to become an REO listing agent. Listen NOW.