THE BUST IS OVER!
July 15, 2012
Now I don't want the seller's in our local market to start getting giddy and giving each other the high five, that is hardly what this headline is about. I don't think it would be a wise strategy to wait for the market to come back before selling your home unless you were born after 1990 and have a good deal of time left. But the good news is that we have a changed market, a market with slightly more activity, a market where home prices have stopped dropping at a quickened rate and that is very good news. Across the country as well as here in Southern Oregon we are seeing multiple offers in the low price ranges, under $200,000, if the property is a deal. In the Rogue Valley the mid ranges are just beginning to show slight activity and the high end market, over $900,000 has recorded only 1 sale in the past six months. However, a number of my listings in the higher ranges have just started to have a number of showing requests over the past 3 weeks.
For a number of months in a row we have seen countywide pending sales exceed the 2011 numbers by 17% on the low side in March to as high as 40% in June. As inventories decline we are seeing the number of available properties per buyer shrink to 4. This is a great time for sellers to sell their homes and it is also an excellent time for buyers to buy, I think the best ever. So my message to sellers right now is this is not the time to play hard to get. Another way to say this is "make hay while the sun shines." It is important to keep in mind that we have a very, very long way to go to fully pull out of this and any number of local or world situations could cause the market to retreat once again.
More good news comes from HousingPredictor.com which forecasts that although housing prices in much of the country will continue to decline there are a few cities that are forecast to have housing price increases. Medford, Oregon and surrounding communities are forecast to have their housing prices increase 13.9% over the next 5 years. You can read the article here: http://www.nuwireinvestor.com/articles/five-best-real-estate-markets-for-2012-2017-59404.aspx
As reported by David Wessel of the Wall Street Journal in his article of July 11, 2012:
“Economists aren't always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don't.
Housing is still far from healthy despite the Federal Reserve's efforts to resuscitate it by helping to push mortgage rates to extraordinary lows: 3.62% for a 30-year loan, according to Freddie Mac's latest survey. Single-family housing starts, though up, remain 60% below the 2002 pre-bubble pace. Americans' equity in homes is $2 trillion, or 25%, less than it was in 2002 and half what it was at the peak. More than one in every four mortgage borrowers still has a loan bigger than the value of the house, though rising home prices are reducing that fraction slowly.
Still, the upturn in housing is a milestone, a particularly welcome one amid a distressing dearth of jobs. For some time, housing has been one of the biggest causes of economic weakness. It has now—barely—moved to the plus side. "A little tail wind is a lot better than a headwind," says economist Chip Case, the "Case" in Case-Shiller.
From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses. "Manufacturing had led growth and construction had lagged," JPMorgan Chase economists said last week."Now the roles are reversed: Manufacturing growth has slowed as private construction comes to life."
Plenty could go wrong. The biggest threat is a large shadow inventory of unsold homes, homes which owners won't put on the market because they are underwater, homes that will be foreclosed eventually and homes owned by lenders. They have been trickling onto the market, slowed in part by government efforts to delay foreclosures; a flood could reverse the recent rise in prices. Or the still-dysfunctional mortgage market could get worse. Or overly zealous regulators or a post-election change in government policy could unsettle mortgage lenders or home buyers.
But the housing bust is over.