The latest from NAR indicates prices and interest rates will rise

By
Industry Observer with Responsive Pest Control

Hi all: I wanted to add to the excellent piece just posted by my good friend Gene Mundt. Gene indicated that we're in the middle of a cycle and those who wait to buy or refinance may pay a higher price down the road.

This morning in our sales meeting one of our managers shared with us some slides from an economist's presentation at the last NAR convention. What was gleaned from the slides was the following:

1) There is no inventory and little is being built to replace it. We all know this. Average housing starts used to be about 1 million/year. Although housing starts are on the rebound from the low of 2009, they are still well under where we need to be. The bottom line is prices are rising due to lack of inventory.

2) There has been quite a bit of talk about shadow inventory. No one honestly knows if the banks are sitting on a  bunch of inventory and we concluded that the banks aren't necessarily going to let anyone know. But the amount of distressed property being sold is much lower these days. It used to be at least 33% of sales and in some cases more. Again, it stands to reason that with less distressed property being sold, prices are rising.

3) Unemployment currently stands at 7.9% nationally. It has come down from a high of 10%. The thought is there will be a trigger point at 6.5%. At that point the prediction is mortgage interest rates will be at 5.5%. The predictions now are for the unemployment rate to hit 6.5% or below sometime in 2015.

What does the above mean for the real estate market? We all know we're slowly recovering off the lows. It also means that if you're a consumer waiting for the perfect time, you'll want to stay abreast of the economic news mentioned above. There's a big difference in payments between 5.5% and 3.625%, for example, not to include the added price paid for a home.

In sum, thanks for reading. If you find this valuable, please share or

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Rainmaker
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Kathy Stoltman
Balboa Real Estate - Ventura, CA
Ventura County Real Estate Consultant 805-746-1793

Hi Paul, valuable information for those homeowners thinking of refinancing and those thinking of buying real estate.

Feb 07, 2013 03:33 AM #1
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Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Kathy: Very true. Of course we hope they heed the message for their own sake! Thanks for commenting. Have a great day!

Feb 07, 2013 04:05 AM #2
Rainmaker
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John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Paul - Thank you for sharing detailed information about the latest from NAR indicates prices and interest rates will rise.

Feb 07, 2013 05:21 AM #3
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Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

John: Sure. Any time!

Feb 07, 2013 08:03 AM #4
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Paul, Gene has a lot of experience and knows what he is talking about, and the information that you have shared is excellent as well.

Feb 07, 2013 10:02 AM #5
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Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Thanks, George. Have a great and blessed day!

Feb 08, 2013 01:03 AM #6
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Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

I think you are right on with your information and this is great information for the consumer. I think we've hit the bottom and are coming up. I do have news on the shadow inventory. At least as far as it pertains to my rural area. Since the beginning of the year, I've been swamped with BPO orders. 99% of them are for properties in a distressed situation. Usually in some stage of foreclosure. I have talked with two appraisers in the last two weeks. They seem to think the banks are going to be hitting us with a whole new batch of foreclosures and the shadow inventory we've been hearing about is real and we are going to see it soon.

Feb 11, 2013 12:46 AM #7
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Paul McFadden
Responsive Pest Control - Seattle, WA
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Debbie: Thank you. It's always nice to hear how things are in other parts of our great nation!

Feb 11, 2013 08:26 AM #8
Rainmaker
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Teral McDowell
Referral Patners LLC - Murphy, TX

Inventory is so low in some areas of our market that shadow inventory could be a plus right about now.

Feb 12, 2013 09:51 AM #9
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Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Teral: Yes, that would be welcomed. Either that or we need to have the builders obtain credit easier where they can add new inventory. Thanks for commenting!

Feb 13, 2013 12:25 AM #10
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