The good news is that foreclosures have decreased; the bad news is that the amount of foreclosures is still too high.
Is 2009 A Year of Hope For Real Estate?
Real Estate is a vital component of our economy; it helped drive our robust economy of the past and was the catalyst in our nations decent toward recession. Most believe that until housing is fixed, our economy will remain stagnant at best. What’s in store for the 2009 real estate market…I guess it depends on who you ask, or what data you use to make your prediction.
Optimism…
Dec. 09, 2008 – Press Release on MarketWatch.com – ForeclosureS.com predicts that the real estate market will rebound in 2009 and that home prices may actually increase. The prediction rests on low interest rates, the recently released data about a decrease in home foreclosures and the fact that housing is more affordable. “(in 2009) housing will not only recover, but we’ll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market” says Alexis McGee, President of ForeclosureS.com, “I can see prices rising again in 2009”.
A different view…
Dec. 09, 2008 Press Release on Bloomberg.com – Bloomberg.com reported that “the index of pending home resales fell 0.7 percent” from revised numbers in September, citing that less Americans signed contracts to buy homes. An economist at Wachovia Corp., Adam York, stated that ’09 “will still be a very tough year for housing” mentioning that “ So much of the activity is distressed sales” making it hard to determine if there’s support for the real estate market. The article mentioned that home prices may fall another 15%, or more, and that new home sales (typically 10% of all sales activities) dropped in October to the lowest level in 17 years.
What about unemployment and confidence?
I’m sure every American hopes ForeclosureS.com is spot on in their prediction of the ’09 real estate market, but I’m not sure a drop in foreclosures, home prices and interest rates is enough to restore confidence in housing, and clear up huge inventory levels. Does the average consumer realize the value in an interest rate reduction; have we not just experienced 3 years of home price declines? We need to stabilize home prices, and most importantly, decrease rising unemployment rates so that Americans have the confidence and ability to buy.
Reality…
In reality, experts, analysts, our media and our government have been wrong before; at least some will be wrong again. You should buy a home if you need a home and can afford one; worry less about how much money you’ll make, or lose, over the next few years and worry more about buying a home that meets your wants and needs. If it’s a long-term investment, statistics say that you’ll make money. Become educated in the process and if you’re not a professional, hire one. Would you invest $200,000 in a mutual fund without asking a professional about the fund? Real estate is local, hyper-local; a bad investment could be a few miles away from a great one.
What do you think will happen in 2009?
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I strongly hope things are going to get better in ‘09 but our reality is the completely different. So I think that we just have to be patient and reduce our budget as much as we can.
It may well be, in the UK at least we are seeing a rise in first time buyer enquiries.
I think you hit the nail on the head here “Real estate is local, hyper-local; a bad investment could be a few miles away from a great one.”
Some markets will start to see a recovery while others will continue to decline in 2009. It all depends on the local market.
Totally agree Mike
Good point about hiring a professional and more importantly, follow their advice and if you don’t like it, get a second opinion. I think the Las Vegas market will be stronger in ‘09, despite everything else. The amount of foreclosures are slowing, but they’ve helped push property prices back down to where they were years ago making everything affordable here again. People are still coming here on vacation and new resorts are still opening up and need workers. I think if people simply believe this will get better it will help make it a reality faster. Often times perception is reality. I do hope that foreclosure.com’s predictions are correct for everyone’s sake.
Predicting the direction of the housing market in the past has been fairly easy. With what is going on today only those that are paid to predict something/anything (analyst) should try and predict what is to happen around the corner. Well lets not leave out the fool as well. The fool will attempt to predict anything.
What we can do is analyze what is happening in the market place and see whether or not we are willing to swallow the risks involved. Many areas of this country are starting to look very good when it comes to historical numbers. I am going to step out on a limb here and say that any price drops where the carrying costs on a home fall below the market rents is unwarrented and housing will shoot back rapidly once things stabilize. So, if you happen to be in one of these markets I say buy without concern.
The reason I see it fit to tell people to buy even with the troubles in the market place is that our world’s governing bodies have decided to make a play on inflation. They intend to prevent economy wide deflation by printing money. This will lead to inflation at some point. Will it get us out of this mess? I am still unsure but what I do know is if the world’s governments inflation ploy doesn’t work the U.S. government will have to default on treasuries and that will make the U.S. dollar literally worth nothing. Therefore hoarding your money is not the answer. You loose either way. If the economy stabilizes the costs of housing will spike since it is a comodity based good. If we head into long term deflation our currency will be worth nothing. This tells me that it is a time to be very aggressive in accumilating real hard assets. For example comodities, comodity based goods and companies that hold comodities or comodity based goods.
Charles,
Ones perception is always ones reality.
If the treasury follows through on driving the rates down to 4.5% that could be a good catalyst for a return to normalcy. But the days of ‘fog a mirror – get a mortgage’ are long gone… so now is a good time for those with good credit and some cash (and who live in a good market) to get in to investing.
I don’t think it will be any better or worse, but the same. (As it used to be.)
But for now, all we can do is wait…
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Truly!!! i’ll go with my above comment, but still i have some hope it will be better than now.
Very useful stuff here. I am researching content for an article. Bookmarked, will be back.
Do you expect real estate prices to drop down further ?
Keep an eye on the unemployment rate.
Well, here we are in June, prices and unemployement are still dropping, but they appear to not be as falling as fast as the end of 2008 and beginning of 2009. I am hearing too often that by the fall, we should be out of the recession, which is good, since my father-in-law is in real estate, and he's been hurting for the past 9 months.