NAR revises forecast for slightly larger price declines for housing
The National Association of Realtors (NAR) now forecasts a slightly larger price decline for both existing and new homes. The revised forecast for the National real estate market:
- median existing-home price will drop 1.3 percent
- median new-home price will drop 2.3 percent
- existing-home sales will drop 4.6 percent
- new-home sales will drop 18.2 percent
- housing starts will drop 20.4 percent
Please read the press release.
Now of course, the media has pounced on the story in their typical manner. CNN, which hasn't had much credibility since the first Iraq war (or should it just be called the Iraq war that was fought in 1991 because Iraq has been at war a lot) had this scary headline.
Home prices: more pain to come. Expected drop in home prices nearly double estimate of two months ago; recovery more than year away.
Kind of big and scary 
Yes, the estimate is now for double the estimate from just 2 months ago, from 0.7% decline then to 1.3% today. Now if the estimate was for a 25% decline and was revised to a 50% decline, that would be scary.
Here's the complete story if you like the more sensational brand of news reporting currently being practiced by the media, this article courtesy of CNN Money.
Now I'm not sure what ad CNN will have when you click on the story but when I found it, it featured one of the unsavory mortgage lenders offering one of those ridiculous loans that got the real estate market into this mess in the first place. You can't borrow $500,000 for $1100 per month without some serious fine print about the size of the payment in the second month.
CNN will take their money from their advertisers and write whatever scary headline and story they want to anyway. Here's some quick advice. Use a real lender recommended by your real estate professional who will help you understand your financing options. Get a real loan.
Back to real estate and the revised forecast. It's all the usual suspects. Too much inventory. Home buyers who took out some of these crazy loans are facing resets and can't afford the new payments and have put their homes on the market. Speculators who financed with the same products are doing the same. There is a lot of inventory.
There are fewer buyers because lenders have been forced to tighten their lending standards (probably even the ones with the teaser ads and fine print) and fewer borrowers can qualify for a loan today. The laws of supply and demand say that when there is more supply and less demand, prices will fall.
Amazingly, prices have not fallen that severely in the Charleston South Carolina real estate market despite the high inventory we have here. As pointed out the other day in the current Charleston market report, single family homes are still slightly up on an average basis and higher still on a median basis. Condos and townhomes are the exception and are lower on both an average and median basis.
As I mentioned there and will reiterate here, prices should drop a little and as of yet they haven't. We're in a very favorable real estate market and we also did not experience the crazy price increases other areas of the country experienced so that should account for some of the reasons. But as I said several times before, there is a lot of inventory available to purchase.
View the complete report. We'll keep you posted.