How Long Is The Current Lull In Real Estate Going To Last?

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Mortgage and Lending with Bank of England (NMLS#418481) NMLS# 1046286

 

 Real Estate Bubble Bursting?

 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.

  

 US population density

 

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".

 Buying 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. 

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Rainer
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Irene Potter
ZipRealty Residential Brokerage - Maple Valley, WA
Creating moving experiences in real estate
The Pacific NW does not appear to be in a lull.  In my part of King County we do have a shortage of inventory in starter homes and condos with a larger supply at mid-entry and higher price points. Our job situation is healthy so I am expecting that we are going to continue to see appreciation at targeted price points through 2007.
Mar 28, 2007 12:21 PM #1
Ambassador
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Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer
Bob:  Right when the subprime/foreclosure issues began last month it seems the investors have been swarming the market.  I seriously talk to investors in the morning saying they will be out in a couple weeks and then the next thing I know I am getting a call from them "I am in town" or "I am jumping on a plane" the same day.  My business is absolutely out of control!
Mar 28, 2007 03:56 PM #2
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Irene and Renee:  It's great to hear some positive feedback.  What was your opinion on the news cycle running it's course with the "bubble is bursting stories"?

R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc. 

Mar 28, 2007 04:13 PM #3
Rainer
27,666
Tom Giansante
The Title Company of Jersey - Wildwood, NJ

Bob,

The interesting thing is that you never really can say when the bottom of any cycle has ocurred until you are well past that point.

I believe we have established a bottom in early January of this year.  I think that will be evident 8 months from then.  So I'll look back in September and see if I was anywhere near correct.

 "

"plum

Mar 28, 2007 04:32 PM #4
Rainer
22,226
Irene Potter
ZipRealty Residential Brokerage - Maple Valley, WA
Creating moving experiences in real estate
While the media focuses on national trends, it was very clear to me that real estate is specific to local market conditions, although it gets filtered through the national perception of what real estate is doing in the broader marketplace.
Mar 29, 2007 04:33 AM #5
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Thanks for the comments!  Tom, I agree that it's very difficult to predict the bottom of a cycle.  I have a friend who lost a small fortune trying to predict market behavior in the futures markets.  I'm not sure that there aren't people who do a pretty good job of it, but he wasn't one of them!

That said, while not exact, I do think that if you are in very close contact with the market that you can read the tea leaves and have a fairly good chance of making an accurate prediction. 

One thing that I did learn from studying the futures markets (I never went past the point of paper trading) was that the further a market moves in one direction, the less likely it will continue moving in that direction.

The reason for this is that markets adjust.  If real estate prices start to drop, people will remove their houses from the market.  Home builders will not put up spec houses and such.  Just remember, this axiom works when the markets are rocking too!

R.B."Bob" Mitchell

ValueList Real Estate Services, Inc. 

 

Mar 29, 2007 04:45 AM #6
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R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham

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