The questions we are most asked are "Just how bad is the market?" and "What will happen in 2008 and beyond?" Let's start with the first question which is answered at two levels, the raw numbers and the underlying activity and energy behind those numbers. The raw numbers do not look that bad, showing our markets down overall by 5-11% in terms of unit sales. And in fact the market shows somewhat better in terms of units if you add leases into the count. In many markets, with leases added in, there were actually more unit sales in 2007 vs. 2006.
It is the energy it took to put those sales together and the home value shift which generates the second part to the "just how bad is the market" question. This downturn is the most significant in the past 30 years, not because the market is off so much (the unit drops where as big or bigger in 1991 and 1981) but that homeowners are in a different position. With higher leverage and less equity, negotiations become tighter and foreclosures more frequent, which cause home values to fall more, resulting in a downward value cycle we have not seen before. In spite of this downward value pressure, there are more buyers than in prior downturns (but more listings as well) and the buying opportunities are also at a level most of us have never seen before.
Prices are at there lowest level in ten years, mortgage rates are low, and contrary to the press, mortgage money is available for first time buyers as well as investors.
HAVE A GREAT DAY
CARL BIDINGER
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