Just a few days ago, CNN.com was predicting a double dip in housing prices. Today the data came out better than expected, increasing 4.2% in the second quarter compared to last year. Certainly that is better than a decline, but the stock market hardly reacted to the increase this morning. There's a lot of skepticism out there.
One reason for the lack of enthusiasm for the better number is that many believe that this increase is just the last gasp effect of the expired tax credits and incentives. The numbers of home sales were down dramatically last month to some of the lowest levels in decades.
Short sales and REOs are still the norm. That means that a great many of the "sellers" these days are people that have lost their homes, and so these sellers are not re-entering the housing market again after the sale, as would be the case more often than not in normal times. They are displaced for one of more years while they try to recover financially and rebuild their credit scores. Therefore, I predict a continued downward spiral in the number of qualified home buyers for at least the next year or two out. I am not an economist, mind you. But I can read the signs like anyone and I just can't see how cash buyers and first time home buyers will be able to make up the net loss in able home buyers anytime soon.
BUT...this should change!
If our idiot government (all parties - I am an equal opportunity mocker when it come to politicians) ever manages to come to its senses and straighten out our economy, and the banks swing the pendulum back to the middle from giving loans to anyone with a pulse to where it is now, when even folks with good down payment and great FICO scores are having a tough time getting loans, I can foresee a huge bubble of new buyers back in the market for homes.
Decades ago a bankruptcy was absolute death for getting credit, but after so many millions underwent BK it became less so. I believe that in a few years, lenders will need to re-evaluate short sales and foreclosures in the same manner. If they don't, there will be very few people left that qualify as borrowers for anything.
So, if things go as I expect, we could be looking at a huge crush of buyers in the market again. These families are renting now or living with friends and family, but once they have their credit back in line and the short sale or foreclosure black marks age, they should be looking to buy homes again.
Perhaps it isn't time to hire that assistant yet, but it may come sooner than we think! Hang in there!
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