Every day we seem to hear some sort of news on the real estate market. One day it is great news about resales being up, new construction permits, foreclosures, etc., the next day doom and gloom.
Some important thoughts:
1. People are saving money right now and hunkering down. Responsible is the "in thing" again.
2. Most markets are experiencing an up tick in real estate home prices - quite the opposite.
3. Lenders are making life tough for responsible people who pay their bills to refi - even though it is out tax payer money for the most part and it would put most home owners in a better financial position to pay bills. Imagine if part of the stimulus money had been earmarked for responsible people to lower their current mortgage rate? Talk about an infusion of money into the economy.
4. The Government is out of control with spending and stimulus. The ordinary citizen could have done a better job directing where stimulus money is going for jobs. I have a few ideas - how about you?
Worst of all the Government wants no input from "average Joe American" - they are stuck on doing what is best for their political party and reelection.
Now for the good news: If you can afford a home buy it now. Interest rates are being driven down (some say artificially) to help you. Waiting to buy could essentially equal out if rates do climb (they have no other way to go) versus real estate prices declining over the next year. Most Important - Do not buy if you are not financially sound nor have a cash reserve.
- Housing will not fully recover until 2012. That is when the glut of backlogged foreclosures is expected to be phased out of the market.
- Housing will recover by the end of the year. Now that inventory has contracted to average levels for what constitutes “normal” regional markets in major metropolitan areas where prices have declined as much as 50% in the past three years, and month to month sales have steadily increased over the past six months, demand has realigned with supply to arrest the freefall in values.
- The housing recovery began in early 2009. Median price increases in some markets indicate that even while many pundits were openly wondering when the bottom of the market would appear, it was actually several months in the rearview mirror.
Many factors and variables, and just as many divergent opinions to boot. So many, in fact, that you almost have to choose amongst the purported experts to determine whether you fall in the half empty or half full category. Job rates, interest rates, unemployment rates … psychiatric rates, for spending too much time poring over the data and extrapolations will render one in need of a head exam.
You don’t need flow charts to tell you where things stand at the moment. You won’t need a market report to tell you when things are better.
You’ll know the market has recovered when you no longer dread the trip to the mailbox or evening phone calls.
You’ll know the market has recovered when you can confidently re-enable automatic bill pay from your checking account instead of prioritizing which ones get paid this month by how far past due each is.
You’ll know that the market has recovered when you don’t have to decide whether you or a loved one is really ill enough to warrant the cost of a trip to the doctor.
You’ll know the market has recovered when you no longer have to explain to the kids why you can’t go to the zoo or stop for ice cream today.
You’ll know the market has recovered when sleep comes as readily as worry formerly did.
You can stop looking to someone else to tell you when the market is fully healed as the housing implosion is the root of these greater ails. It’s far easier to take stock of your own life, and those of your friends and family, to see where along its arc the pendulum is currently settled. As the finance/housing sector dragged our economy into the muck, it will again lead us back to dry ground. No need to watch the stars for celestial clues. Just do what no pundit can and watch your own life for improvement. You’ll know housing has recovered when both of your own feet are planted squarely on terra firma.
Most importantly, beware the forecasts that don’t jive with your own internal index. Those who would adamantly assert the rosiest or bleakest prognosis are likely more interested in influencing your behavior than in your well being.
“Buy now before prices shoot back up!”
“Sell now before prices erode further!”
When you stop listening to yourself, you risk placing all of your trust in the megaphones of those who have a vested interest in your fear.
Is the housing market improving? Is now the time to buy? The time to sell? For months, I have been asked to provide the answers to these questions. I have dutifully provided my vague predictions with the obligatory caveat that no one truly knows how a free market will behave from one day to the next. I realize, though, that in supplying answers to those who actually give the market context, that we have all been looking at this thing from the wrong perspective. It makes zero difference where I think the market stands at present, and where it is headed. The very consumers who ask me these questions are the ones who will ultimately provide the truth or fallacy to my various hypotheses. So I turn the tables and ask the consumer, the actual authority, the very same question.
“What is the state of the Real Estate market?”
Feel free to comment here or send me an email with your thoughts. Looking for opinions from consumers and laypersons, not agents or financial wizards (all comments welcome, though). I will post the results in a follow-up piece.
Mr. Homeowner & Mrs. Homebuyer, the floor is now yours.