Real Estate Bubble Bursting?
I heard on the news the other day that existing real estate sales are down this past month after having been up a bit the previous month. I'd have to say that based upon the number of times that my phone rang for showings and for property calls, that those figures were just about right. That there was a bit of a spark last month, then "poof" it was gone.
That said, how long is the current lull going to last? One of the featured blogs today asked if we thought that buying real estate was a "buy", a "sell" or a "hold"? My answer is that it's a "buy"!
I based this answer upon demographic trends. The population of the US just topped 300,000,00 and while population increases are slowing as the population ages, the total population of the country will continue to grow. Immigration is expected to continue adding to this population growth. More people equals more demand for houses.
Also, in the long run, housing stock is considered to be flexible. If the demand for housing does subside, then home builders will not build as many houses.
Other trends such as household formation and home buying by minorities and other groups that in the past have not been as likely to own a home add to the likelihood that home prices, in the long run, will continue to rise.
That's all fine and dandy Bob, but when is THIS lull going to go away? Well, first I don't know if we can call the current situation a "lull". The market has been rocking for a LONG time. Is the current "lull" just the return to a "normal" market? I know that sucks if you're an agent, if for no other reason than the fact that the boom brought a lot more agents into the market. But I have faith that the market for real estate agents will correct itself too. Many of us who would have otherwise been selling cars or working at the 7/11 are going to go back to doing those things. When the marginal agents have left the business, then each of the remaining agents will get a bigger slice of the pie.
One bright note is that the "Real Estate Bubble Bursting" stories seem to have run their course. If you were thinking about buying a home and kept hearing this on the tube, would you have rushed out to buy a home? I wouldn't have! That said, I haven't seen one of those stories on the news or read one of them in at least a couple of weeks. I've even seen some stories that painted the current market as an opportunity to "buy on the dip".
Demographic trends in a positive direction, marginal agents leaving the business and negative press seemly subsiding all lead me to believe that if you work hard, are patient and use the opportunity to increase your market share in your area, that the "lull will be over sooner rather than later.
"Sooner rather than later? Come on Bob, give us a prediction!" Alright! alright! I'll break out my crystal ball. Be forewarned, this is simply an educated guess on my part and I could be wrong. This prediction and about $4.00 will buy you a cup of moka joka latte at the local Starbucks, but here goes nothing.....you heard it here first....
April will show a slight increase in real estate activity over-all, nation wide. May will continue this increase and will end up being a good month.
Let me know what you think!
If you find economics interesting then you may want to visit this analysis that was done by the Dallas Federal Reserve. http://www.dallasfed.org/research/er/1994/er9401b.pdf
As always, please feel free to drop me a line or to visit our site www.valuelist.org
R.B. "Bob" Mitchell
ValueList Real Estate Services, Inc.