Market Predictions

By: Tim McLaughlin    

           We have seen and heard many prominent industry people (most notably Jim Weichert) talk about the fact that the real estate market has approached, or hit, bottom, and that it is a great time to buy. On Wednesday, former Federal Reserve Chairman Alan Greenspan echoed that sentiment, which was seen as a very positive sign and a boost towards the sector recovery.    

     In a conversation this week, Greenspan stated that he expects U.S. housing prices, a key factor in the outlook for the economy and financial markets, to begin to stabilize in the first half of next year. "Home prices in the U.S. are likely to start to stabilize or touch bottom no later than the first half of 2009," he said in an interview.  

     Even in "retirement", his views remain widely watched. Mr. Greenspan's housing forecast rests on two pillars of data. One is the supply of vacant, single-family homes for sale, both newly completed homes and existing homes owned by investors and lenders. He sees that excess supply, roughly 800,000 units above normal, diminishing soon.

     The other is a comparison of the current price of houses, he prefers the quarterly S&P Case-Shiller National Home Price Index because it includes both urban and rural areas, with the government's estimate of what it costs to rent a single-family house. As other economists do, Mr. Greenspan essentially seeks to gauge when it is rational to own a house and when it is rational to sell the house, invest the money elsewhere and rent an identical house next door, and he has commented on a number of occasions as of late that that breakpoint has arrived.

     He also estimates the number of new households in the U.S. currently is increasing at an annual rate of about 800,000 a year. This increase will "markedly accelerate the absorption of unsold housing inventory for sale, and hence help stabilize prices at the same time."

     So Jim says the market is getting better. And now Alan is concurring with that sentiment. Sounds like a great time to buy. Lots of housing options to choose from and rates are still affordable. And we can help! Together, your Weichert Financial Services Gold Services Manager and your Weichert Realtor can help you find and finance that house of your dreams. Let us help you make that dream a reality.