I have been writing about the market for months saying we are bottoming. What we needed was a price and interest rate line to cross, along with plenty of mortgage money. Well, it looks like we are there and past through the bottom, over the winter here. Let's look at why.
1. Many markets like Southern California, Florida, Nevada, Arizona, which amount for the bulk of the foreclosures have dropped over 50% from the highs. In some cases 60%.
2. Markets like Bergen County New Jersey, North Jersey in general and many metro area suburbs have decline less than 20% or there abouts and have been declining in volume for about 3 years. They had a big run up yes, but no where near the amount of the areas in point 1. There wasn't the same amount of area to over build in the Bergen County North Jersey area. The towns that had some major building are still resolving, but resolve they will, here and now.
3. The Major Cities like New York and maybe Boston somewhat have only been in a decline for a lesser time. They are the money centers and held up longer. They also benefited from the dollar decline to international investors. They had run up too far for too long and will probably stay flat or down for a while yet.
4. Interest rates went under my 5% barrier. This is a psychological barrier for many buyers. Once under decisively they are hooked. It is the old last low areas that people wanted to finance at, or even did.
5. Mortgages are now for real, since the fed mone, has been buying mortgage paper like it is going out of style.
6. The last key was Jumbo's came back again. With out the securitizing, jumbo's dried up. Well they came back at normal rates, just a little high on the spread but much better than the past. This will help the higher markets other than the speculative in point 1. Markets in point 2 and 3 need the jumbo's.
7. Extreme pessimism had been reached. Almost every one was or is a real estate bear.
8. Super aggressive Federal Reserve and Treasury, making money come out of every crack at some point. I keep saying if the money comes in, it will happen. I almost felt battered by it for the past 3 months waiting for the data to start supporting my position.
Market projection are done with faith in your beliefs. Everyone who knows me has seen I put my money where my month was and started 4 more new houses this quarter. I have been trading to long not to feel the misery that this bear was and is giving off. I think the bear is at least going into hibernation and maybe he is going away for sometime.
Some places like Atlanta need a major intervention, this will happen too. If any investors had the savvy they would be heading there right now. I am trying to get a group together my self. There is big money to be made there if you get there before the fed dose. I am not getting all caught up in this, it could fall apart abit latter in the year seasonally, along with selling presure. However, the real key is the dollar and our overseas investors for our Treasuries, hang in there with us.
So, on the back of Florida's home sale volume going up for the 5th straight month. Southern California home sale volume is perdicted to be up about 100% this month, along with a possible price rise. Nevada volume is up and Arizona is picking up . Yes, they were down alot, maybe as much as 60%, but it all starts with smoke, then there is fire. People will buy and in force when things are right. Let's remember a lot of people are out of work, maybe 9%, but that leaves 91% working. Buyers smell a deal and that is what they are getting, great deals with great rates!
You know, we are all tired of the bear now and what to smile more, laugh more, play more and just not worry so much.
We will go over the other markets in Trader's Desk Signals post soon.
If you are a seller, you have a chance to move on. Let's get busy selling real estate, if your a buyer, then get step up, this a one of those great times to buy!
Being a lonely Bull this winter has not been fun. It is no fun to be on the other side of everyone else. Now, I think I am going to get some company. Today's existing home sales, reported by NAR were up 5% nationally. It's a start!
Richard
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