• 10/30/2008 - New Article
• 04/15/2007 - KITCHEN MAKEOVERS THAT “SIZZLE”
• 03/27/2007 - WHY YOU SHOULD DO A HOME INSPECTION!
• 03/27/2007 - FOR SALE BY OWNER TIP – Just Don’t Do It!!
• 02/11/2007 - CHOOSING YOUR REAL ESTATE AGENT
• 01/11/2007 - SIGN OF THE TIMES! - WHAT'S HAPPENING OUT THERE??
• 12/11/2006 - THE BATH - Enjoy It Before You Sell It!!
• 11/11/2006 - FIXING UP YOUR HOME FOR A QUICK SALE
• 10/11/2006 - MORE LISTINGS, FEWER BUYERS - CHANGING EXPECTATIONS
• 09/16/2006 - SHOULD YOU OWN YOUR HOME?
• 08/11/2006 - HOME INSPECTIONS
• 07/11/2006 - THE SECOND HOME MARKET
• 06/11/2006 - SELLERS NEED TO THINK LIKE BUYERS
• 05/11/2006 - REAL ESTATE IN A COOLING MARKET
• 04/11/2006 - REMODELING ON A BUDGET
• 03/11/2006 - SUCCESSFUL REAL ESTATE INVESTING
• 02/11/2006 - HOW TO BUY YOUR FIRST HOME . . . AND APPEAR EXPERIENCED!
• 01/11/2006 - SQUEEZING EVERY LAST DOLLAR FROM YOUR HOME SALE!

WHAT’S HAPPENING OUT THERE??

Record-Eagle,  January 20, 2007             Cookie McCullough
Our nation’s housing markets have been in a slump since late last year. But take heart – the worst may be over! As we enter the new year, further contraction in the housing industry may be limited. The signs are out there – but you need to look for them.

According to some economists, there is good news - the market has essentially already bottomed. The pace of existing-home sales is expected to rise in the first quarter of 2007 – on a seasonally adjusted basis. Home prices, which have been falling since August, will follow this positive sales trend and begin to strengthen by the second quarter.

By the late spring of 2007, the media will likely begin reporting positive “uplifting” trends. Statistical momentum says that will inevitably happen. Many potential buyers at that point will regain the confidence to enter the market. Some smarter buyers will see the herd of impending buyers and will want to get a jump start.

Statistics say more about the past than they do about the future. The numbers can lag behind weeks or even months, and the first indications of what many in the industry are hoping to see – renewed buyer interest – may not be captured by any statistic. Agents will see increased traffic, more phone calls, and e-mails long before the results of that activity show up in closely watched statistics.

In our area, there’s a familiar refrain: the reason homes aren’t selling is because sellers haven’t come to grips with the fact that price appreciation has slowed or reversed. If interest rates go up, expect that to be an even bigger issue as buyers find the same monthly mortgage payment buys less house.

Buyers base their purchase decisions on monthly payment and the interest-rate terms. Conditions on home loans over the past two months have been fantastic and continue to be very good while the market allows the buyer to negotiate an extremely aggressive price.

As I see it, we have the press still saying the sky is falling, most sellers still overpricing, buyers are still sitting waiting for the bottom without understanding that if interest rates go up one (1) percent – their payments will increase dramatically, even if prices come down ten (10) percent.


It’s About Confidence
So why should the doomsayers of housing – those who are predicting a prolonged contraction and a tumbling of home prices – believe that the housing contraction of 2006 is almost near its end? The answer lies in the attitudes of households. The current contraction has to do with household confidence, or rather, lack thereof. Previous housing downturns were driven more by households’ financial means to purchase a home.

For instance the last two housing contractions (1979-1981 and 1989-1991) occurred against an economic backdrop of job losses, a recession, and double-digit mortgage rates. Simply stated, households did not have the finances to purchase homes, even if they wanted to. Today’s housing contraction has more to do with negative household confidence, and home prices rising to unaffordable levels.

During this past year, affordability measures improved. With every home price drop, there is a buyer who is standing on the sidelines and is now willing to get back into the home-buying market. There are also marginal home buyers who now qualify to purchase a home because of falling prices. So over time, there are market forces that are working to improve affordability, thus permitting households to buy homes. This is why the 2006 housing contraction is almost over.

It takes buyers a while to get moving, and often I see a lull between market changes and action, but buyers are beginning to venture forth. Interest rates are low, inventory isn’t as high as it will be in April, and sellers who are willing to wheel and deal are making deals.

In the last two weeks, I have received three calls on two pending sales. Those buyers asked to be put on a waiting list for similar inventory. Guess I better get busy and take more listings! The holidays are over. It’s time to get back to work.

You should put all of this into perspective. The real estate boom of 2002-2005 was unprecedented. The industry flew higher than ever. The plane needs to land and refuel in order to take off again!