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Where is the market heading? When will it turn around?

Today I watched a video interview of Barry Ritholtz, CEO and Director of Equity Research from Fusion IQ give his take on the market. To him the market has more years left of recovery. He must have looked into his crystal ball and read the future. I have no reason to believe it will take years.

We have already been trough one year of correction, and I believe the stabilization will be occurring by the last quarter of this year. At least for our market in Phoenix things are beginning to look optimistic. Investors are out buying homes again. Some Homes are getting multiple offers and inventories are beginning to recede.

Along with low interest rates and low prices on new and resale homes makes this an opportune time to buy for those that are ABLE to buy. Of course I will hear more doom and gloom speak from the media and consumers, but the reality is that things have already begun to change. I wouldn't go as far as to say that things are better but they do seem more stable that a year and a half ago.

Feel free to leave any comments or any ideas you may have on this subject.

inman Connect - NYC 08 - Barry Ritholtz

Posted by Ulises Romo on 02/06/2008 08:39 PM

Comments (6)

real estate, market conditions, stabilization, correction, consumers, phoenix market, phoenix real estate, arizona real estate

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6 Comments on Where is the market heading? When will it turn around?

FEB

2008

In listening to him..I believe he is a friend of the stock market. He was partial to stocks and down on real estate in general..I think the market is shifting and this youtube post may be a few weeks old. I think if people listen to him to careful they will miss the best opportunity.

Don: Buy real estate when prices are low. Sell real estate when prices are high. People seem to do the opposite for some reason.

Ulises,

I hate to say it but I think we are a long way form turning the corner. I am a Broker in Michigan and we have been in rough economic shape for a couple years now. We've been dealing with REOs before most agents in the county even knew what an REO was and I think the rest of the country has got a lot of catching up to do. I pulled a bunch of stats from the MLS this week and here are the numbers in my market. (which is a nice shoreline, blue collar community about an hour north of Detroit.)

Prices have slid 18% since 2006...in 2006 the average sale price was 153,000, it dropped to about 139,000 in 2007, and in the last 90 days it dropped to 126,000.

REO's make up 34% of our current sales, they were only 18% in July of 2007, based on the number of properties we have in redemption I think we will see REO's make up 50% on our market by yearend and I expect prices to drop another 10%.

From what I hear the peak sub-prime purchase and refi mortgages are set to adjust this spring which means the banks will get those back in late 2008, early 2009 and then it will take a few months to liquidate those properties. Basically, I don't think things will stabilize until mid to late 2009.

If that's the case, we won't see any appreciation until 2010 and it will probably be 2015 until we are back to 2005 values. I'm telling my sellers to forget every conversation we've ever had regarding values and for most a 20% price reduction is in order. If they can't do it, they might as well make plans not to sell or find 25K to bring to the closing because it's going to be along time before things get better.

Just my opinion based on the numbers.

FEB

2008

I am with Marc, it is going to be years before we are stable. There will always be buyers and sellers, but, there will not be the volume of people that were active in the last 7 years. All of the bad credit issues need to be solved. That alone will take time.

Frances: The amount of qualified buyers has shrunk. But I believe it has shrunk because now only buyers who are truly qualified will get loans. Unlike years past where anyone with a heartbeat could get a loan.

So with that I agree. Will we have a 2005 market here in Phoenix this year or next? No. But we will survive.

Thanks for you comment.

Marc: The numbers are down. But all real estate is local, and our market is not sliding down as fast as it was in past months. To me the market in Phoenix is good for buyers and bad for sellers. Will we see appreciation soon? Probably not soon, but prices will not be dropping for very long here either.

Thanks for your comments.

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