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Housing Isn’t Entering a Double-Dip; It’s Merely Continuing its Journey

By
Services for Real Estate Pros with TheHousingGuru.com

While some point to the possibility that home prices and sales may once more turn down, the reality is that housing isn’t entering a double-dip; it’s merely continuing its journey. Homeowners or potential home buyers want to know what’s really happening; but the news is so confusing that it’s virtually impossible to tell. For many the confusion arises from the surge in sales and prices that began last fall and continued into the spring, a time when economists and pundits were quick to call the housing bottom.

 

Jim Cramer even set the specific date for the bottom, June 30, 2009, telling consumers to go out and buy.

Alan Greenspan agreed and said housing would bottom by the middle of 2009.

Housing Predictor said that most of the market would see bottom between April and June of 2009.

Moody’s put the date a bit further out, guessing Q-3.

Money Magazine said to wait until the end of that year.

● Late in 2009, the NY Daily News gushed with optimism, “Home prices are nearing the end of a three-year slump and should rise in 2010.” They based their prediction on the polling of forty-one economists, with all but one agreeing that a bottom had been reached or would be reached within a year.

 

Many of the positive predictions came about as a result of the Housing Tax Credit, which, in some areas created a buying frenzy with happy sellers raising prices to compensate for the government’s gift.

 

More recently however, negative voices have been predicting a “double dip” for the housing market. It’s no wonder that buyers are sitting on the sidelines or that sellers are either elated because “home prices are rising,” or depressed because of the coming “double dip. On Wednesday, an article on HousingWire stated, “Housing’s double dip is here.

 

However, I don’t believe we’re entering a “double dip,” for housing never truly reached a bottom. The anticipated stabilization that was to be created by the multitude of recent government programs never materialized. The additional sales and price increases that resulted from the Tax Credit was artificial and failed to provide the predicted results, doing nothing more than shuffling the year’s sales numbers, while costing taxpayers billions. There was no wave of “new” buyers, for only a miniscule number of permanent renters were enticed to become homeowners. No, we need not fear a double-dip; the housing crisis that began in most areas in 2007 is still going strong, and a comparison of the annual sales numbers will quickly point that out.

 

Certainly we can find comfort if “our” area is doing okay, but the bulk of the country is far from okay. However, buyers and sellers shouldn’t be fearful of this news of a “double dip,” as if there is some new villainy set to prey on housing. The market is merely continuing the process of being re-defined, a process that includes lots of ups and downs. And while no one can be certain of the ultimate outcome, those who pounce on this latest prediction de jour will remain as confused as ever.

The Housing Guru: The expert source for all your housing questions

 

 

 

Terry Chenier
Homelife Glenayre Realty - Mission, BC

John,

It's going to be interesting when the commercial side in trouble goes into foreclosure. We haven't seen the bottom yet.

Aug 26, 2010 04:51 AM
Jennifer Pirkle
Harvest Realty 678-617-0715 - Dawsonville, GA
Dahlonega, Dawsonville, Cumming, GA

I agree.  There was no recovery here in North Georgia.  I sincerely hope that this is the bottom, though!

Aug 26, 2010 05:00 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Terry - We haven't seen it, but surely it's there . . . somewhere.

Jennifer - I think we're still in decline.  As the reality of inventory levels begins to impact the market, we'll see prices dropping.

Aug 26, 2010 05:11 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

John: I like your take on this. Thank you. Either way, the journey will be long and arduous for a while. Thanks again for the post. I personally don't look for a housing recovery for at least the next couple of years. Take care.

Aug 26, 2010 05:15 AM
Aaron Vaughn 830-358-0455
Conifer Builders LLC - Canyon Lake, TX

John:

Great points made here. I think when economists start becoming cheerleaders, it becomes very difficult to take them seriously. I think I'll blog about it now.

Aug 26, 2010 05:39 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Paul - I just report what I see.  Now that I'm no longer involved in the home building industry, I have more time for research.  It appears that the future of housing will look significantly different for some time.

Aaron - All I want is the truth; give me the facts, and I'll determine where I should go from here.

Aug 26, 2010 05:53 AM
Mark Smith
Cherry Creek Properties, LLC - Erie, CO

I think it is simple supply and demand. You must look at pricepoints and locales. We will see first timers be a LARGE part of this market UNTIL the job market grows.

The low end is very active (slightly less than during the tax credit). The higher end (for most areas that's $ 500K and up) will be tough for some time. People forget the last 10 years the lending world created products for people to buy homes they couldn't afford. Sure the sub-prime stuff blew up, but the real killer is the death of the Stated Income loan for Self-employed. Many psedo wealthy used these loans (some properly and some not so much) to progress their business, purchase 2nd homes, or investment property.

Folks- these people are the JOB creators and they can't get SBA loans, Helocs, or even refi any of their properties.

Stay tuned!

Aug 26, 2010 06:19 AM
Mindy Sylvester
MVP Realty - Naples, FL
Naples Fl Real Estate

THANK YOU!! When I first had the "Double Dip" explained to me, that was my first question -- "how can this be a double dip if it's just a continuous downward trend??" My mentor was as flummoxed as me. I'm glad I know about the "Double Dip" concept but...it's got nothing to do with what we're all living through (and working through) in 2010!!

Aug 26, 2010 08:31 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Mark - It is a mess, and I don't see a cure on the horizon.

Corinne - Housing, as a part of the economy in general, is undergoing structural changes; but those who don't just sit and wait for the return of the "old" market can do quite well.

Mindy - Exactly!

Aug 26, 2010 08:50 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

And if "wishing made it so" those predictions would have been right. 

They are not.

Aug 26, 2010 09:27 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Carla - Perhaps we should be "hoping" instead of wishing.  That works sometimes.

Aug 26, 2010 11:17 AM
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

I'm sorry John.  You have this all wrong.  This is the summer of recovery. 

I will revisit your blog to see if you have made the correction or see if my correction has been deleted.

 

 

(;>)

Aug 26, 2010 01:42 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jay - As usual, you're right, but I'm out of Wite-Out, so I can't make a correction.  Thanks for pointing me to the straight an narrow.  This is the summer of recovery. This is the summer of recovery. This is  . . .

Aug 26, 2010 02:24 PM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

It might be a double dip, but the rise in the middle is less real than a Hooter's waitress (I had to tone that down a little...)

Aug 26, 2010 04:12 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Lane - And like your analogy, the rise was artificial.

Aug 27, 2010 02:12 AM
Jenna Dixon
Momentum Real Estate Group LLC - Marietta, GA
55 & Over | New Constructions | Horse Farms

John,  What is your take on how the leaking commercial bubble will impact residential lending?  I don't see any significant up tick in the housing market with banks taking back BIG commercial paper...

Aug 27, 2010 05:51 AM
Lori Mode
The Mode Real Estate Group - Elk Grove, CA
Real Estate Made Simple

John - it's been an interesting few years and will continue to be interesting for the next few.  I agree this is still basically a correction and the slight rise was artificial.  We are still doing good in the Sacramento area overall right now however are inventory is increasing.

Aug 27, 2010 06:39 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jenna - I don't think it will have a dramatic impact, and will probably vary by area.  Banks are doing everything possible to avoid a collapse of CRE.

Lori - And we're preparing to enter the "slow" period in sales.

Aug 27, 2010 06:45 AM
Esko Kiuru
Bethesda, MD

John,

That's a fair argument and the real estate events over the past year or two support your blog. Many areas of the country certainly aren't making any progress at all, despite the government help and truly enticing mortgage rates.

Sep 04, 2010 01:28 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Esko - And once we can all acknowledge the reality of where we are, we can develop a new course.

Sep 04, 2010 04:10 PM