Four Housing Market Myths

By
Real Estate Agent with Palatium Auction and Appraisal Service, Real Estate Auctions, Estate, Moving, Downsizing Auctions 618-233-1000 USPAP Appraisals proesch@ptauctions.net

After several years of housing depreciation, the one thing that seems to be on everyone’s mind is, “when will this housing recession end?” and “when will my house start gaining value again?” This eagerness by homeowners to get the housing market back on track has spawned several misconceptions about the housing market.

To help homeowners set reasonable expectations for the housing market in the coming years, Zillow’s Chief Economist, Dr. Stan Humphries presented “Four Myths of the Housing Market” alongside Doug Duncan, chief economist for Fannie Mae and Bob Bach, chief economist for Grubb & Ellis at the recent National Association of Real Estate Editors (NAREE) conference in Austin, TX.

Four housing market myths:

1. The housing recession is over
While home sales have reached a bottom, home values have not, and likely will not bottom out until Q3 of 2010. Zillow’s April data shows that nationally, home values fell 4.1% year-over-year, 1.1% quarter-over-quarter and 0.4% month-over-month.

2. We’ll see a return to historical appreciation rates after we hit a bottom in prices
Not true. The housing bottom is likely to be long and flat, and it is highly likely that we will not return to historical appreciation rates for another three to five years. There are several contributing factors:

-Shadow Inventory: There are approximately five million homes that are 90+ days delinquent or currently in foreclosure, according to both the Mortgage Bankers Association and Lender Processing Services.

-Sidelined Sellers: There are 5.3 million homeowners waiting on the sidelines to sell once the market starts to show positive signs, according to Zillow’s Q1 Homeowner Confidence Survey.

-Negative Equity: With 23.3% of single-family homes with mortgages currently in negative equity (up from 21.4% in Q4 2009) and unemployment forecasted to stay at elevated levels, we’ll continue to see high rates of foreclosure. Moreover, negative equity is suppressing housing demand since homeowners trapped in their current homes because of underwater mortgages can’t go buy new homes.

-Mortgage Rates: The good news is that current mortgages rates are at historic lows and they’ve defied, thus far, predictions that they will climb (thanks to European sovereign debt woes). Long-term though, they will be higher than they are now and that will impact housing demand.

3. The worst of the foreclosure crisis is over
The rate of foreclosures is actually INCREASING nationally. According to Zillow’s April data, 1.1 out of every 1,000 homes was foreclosed upon in April. In some of the harder hit metros in California, Arizona and Nevada, 3-4 out of every 1,000 homes were foreclosed upon in April. Foreclosure rates will likely stay elevated so long as rates of negative equity and unemployment remain high.

4. The home buyer tax credits saved our bacon
The home buyer tax credits did stimulate sales, especially during the first wave of the credit in 2009 when it was exclusive to first-time home buyers. During its first incarnation, the tax credit likely did even mint new incremental sales that wouldn’t have occurred otherwise (see our analysis here). In its second incarnation, however, most stimulated demand was likely pulled forward from future months versus being incremental new sales that would not have occurred otherwise. Historically low mortgage rates, dramatically increased housing affordability, and substantially ramped up lending from the Federal Housing Administration have been enormous factors in getting sales moving again. The first round of tax credits may have created a shift in market psychology that was helpful to the market but, arguably, these other factors alone might have pushed sales up from their early 2009 low.

Read the Story

Posted by

Paul
Paul Roesch
Realtor, Auctioneer, CAI, AARE, CES, GPPA, ATS
Marketing Director 
Certified Distressed Property Expert, CDPE
618-407-8479 cell
proesch@ptauctions.net

 Add me as a Friend on Facebook Paul M. Roesch                                                                        

Free Sign Bidder Early Bird Notification of Upcoming Auctions

Auctionitnow  Father Time Auctions St Louis MO

All original text, video, and photo content is the exclusive property of Paul Roesch and / or Palatium Auctions (the Company) and may not be used without expressed written permission. All information deemed reliable but not guaranteed. All personal, real and intellectual property is subject to prior sale, change or withdrawal. Neither the Company or information provider(s) shall be responsible for any typographical errors, misinformation, and misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. The Company has no control over the quality, safety or legality of the Auction Items listed, the truth or accuracy of the listings or any other information provided by Sellers about the Items. Listings may be sold, withdrawn at any time or subject to change without notice.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
Missouri
Tags:
zillow
father time accredited real estate auctions
auction it now
paul roesch accredited real estate auctioneer
housing myths

Post a Comment
Spam prevention
Spam prevention
Post a Comment
Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
402,475

Paul Roesch CDPE 618-233-1000

Real Estate Auctioneer CAI St Louis MO Auctions
How Does an Auction Work
*
*
*
*
Spam prevention

Additional Information