Well, That's The End Of The Good News On Housing

Real Estate Agent with JustListedKnoxville.com / Signature Homes

After a remarkable recovery in housing, even the perma-bulls are throwing cold water on the outlook for the next six months


Because much of the recovery has been driven by two factors, both of which are likely coming to an end:

  • The expiration of the tax credit, which was extended to April and probably won't be extended beyond that (though anything's possible in an election year)
  • Rising mortgage rates, as long interest rates rise and the Fed eventually stops subsidizing mortgagerates and actually starts selling mortgage-backed securities back into the market (driving mortgage rates higher).

It's possible, of course, that neither of these things will come to pass.  The desperate Congress could extend the voter bribe tax credit until November 5th, and deflation might yet take hold and drive mortgage rates to new lows, a la Japan.  But for now, it looks as though we're coming to the end of the gravy train.

Before we starting whimpering, though, it's worth reviewing how remarkable the recovery in sales velocity has been.  Check out the charts below from Northern Trust:





Comments (4)

Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

I hope you are wrong. I hope the housing market will continue to improve.

Dec 25, 2009 03:34 AM
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana

Steve I just wonder how the prices will hold up once the demand there now drys up?

Dec 25, 2009 03:43 AM
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

Housing inventory is so very, very low in our area. Demand is much stronger than available inventory due to our great schools in the San Ramon Valley Unified School District.

Dec 25, 2009 03:43 AM
Tom Robinson
Keller Williams Realty Kingstowne/Alexandria, VA Office - Fairfax, VA
Experienced Real Estate, Professional Serving No. VA and DC

I think it will vary from market to market. Currently in Northern Virginia, we are experiencing rapid population growth for a couple of reasons.

1. The Federal Government is hiring and the BRAC changes (military) are bringing thousands into the area from other metros looking for or taking jobs.

2. The unemployment rate in Fairfax County is 4.7% among the lowest in the nation.

Things are not perfect. We still are seeing a ton of short sales and foreclosures. Unless there is a major shift in interest rates, etc. , I think we are on our way back to something resembling normal.

Dec 25, 2009 04:50 AM