It was a pleasure listening to Dr. Yun's perspective again today as he tailored his speech to the Idaho market. I have had the privilege of hearing him speak at several NAR meetings in Chicago and in Washington, DC previously.
Some of the key take away points for me today included:
- Of the $800 million in stimulus money handed out , $10 million of it is doing what it was intended and that is the $8K First Time Homebuyer Tax Credit;
- The market is still not quite self sustaining since many buyers are still on the sidelines concerned about even lower pricing;
- Even though pricing is lower than year ago numbers, the trend is reversing and month over month numbers have been improving for 3-4 months;
- Nationally, we are at 5 months of increases in pending sales activity (seasonally adjusted);
- The removal of the excess bubble has already occurred and we are overshooting the correction now;
- Annual increases in appreciation is about 3-4 percent since 1970 so we are now below that curve;
- New construction inventory now stands at below that of the pre-boom days;
- Population growth and housing formation models indicate we should need about 1.3 - 1.7 million new homes a year and we are building way below that now;
- Even in 2001-2002 sub prime loans averaged 12 percent that were 90+ days delinguent;
- Current price increases annualized in parts of California may equate to 15% increases in property values;
- Major issues have shifted from Short Sales to HVCC and appraisal issues;
- Nevada and Arizona are also coming back well;
- Employment lags production numbers in the economy since companies can absorb additional production prior to having to hire. Employers typically wait to make sure the demand is sustainable first.
- The number of renters that can afford to buy modestly priced homes has increased nearly 50% in recent years from 11 million to 16 million.
Another interesting statistic he mentioned was that the average home sale generates $62,000 in additional impact (appraiser, inspectors, title and escrow officers, moving companies, etc.)
In Idaho, we were blessed that we were not as heavily involved in the sub prime meltdown. The spike in out of state investment during the boom pretty much echoed the bubble locally. Our home prices are stabilizing.
Conclusion: It is too early to say it is over, but at least there is strong evidence showing the turn around has started. Buyers are starting to realize if they don't act, they may miss a "golden opportunity".
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