When will the [National] housing market turn around
A mostly negative but interesting article from Bloomberg with lots of experts weighing in on when the housing market will turn around. Too much inventory, job losses and a lousy economy and the prospects for many more foreclosures are weighing on the housing analysts.
A few quotes:
“Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco.
About 2 million houses will be seized by lenders by the end of next year, according to Mark Zandi, chief economist of Moody’s Analytics in West Chester, Pennsylvania. He estimates prices will drop 5 percent by 2013. After reaching bottom, prices will gain at the historic annual pace of 3 percent, requiring more than 10 years to return to their peak, he said. “A long if not lost decade,” Zandi said.
The national declines likely will be weighed down by more troubled markets. Working through the inventory depends on variables such as local employment and the amount of homeowner debt, said Sam Khater, chief economist for CoreLogic Inc., a Santa Ana, California-based real estate and financial information company.
And there is quite a bit more.
But, after all, real estate is local and while the Charleston real estate market is certainly in much better shape than the more well known bubble areas like Nevada and others, we certainly haven't been and will not be exempt from a little pain in the future.
And it's only my opinion but I just don't think some of the extreme negativity expressed in the article will be exemplified in the local Charleston housing market.
And what are your alternatives anyway.
Housing is still shelter and you're going to have to pay to live somewhere. So take this example. I'm going to list and sell my house at the beginning of next year. I'll put a list price on it that is realistic and we probably won't make any money like we did when we sold previous homes. Thankfully we're not underwater and if we were, we wouldn't just put it out as a short sale and kill our credit for years to come, we'd come to closing with a check if necessary.
And if we have to sell cheap, we'll try to buy cheaper.
Of course, job losses and other hardships force many people to lose their homes to foreclosure and some homeowners are trying to avoid foreclosure through a short sale. Some homeowners however are trying to do a short sale to get out from being underwater. And while it is certainly a hardship to be underwater on your home, it actually is not a hardship that the bank will just accept and take a haircut on your debt. Unfortunately, you signed a large pile of papers promising to pay it and just because it isn't quite worth as much as it used to be or what you hoped for, you did sign.
Now, if we didn't own for the past number of years, (sarcasm ahead) I doubt that we'd have been living free under a rock someplace. We would have rented a house or apartment and having done that in the past, I remember I had to write a check to my landlord on the first of every month. Now back to the example, let's say that we would have rented for a nice round number of $1000 per month and since we've lived in our home for 6 years, that would have been 72 months or $72,000 in rent payments.
So while there is a lot of doom and gloom out there, remember that everything is cyclical so instead of selling high and buying higher, we'll sell cheap and buy cheaper. And one day the economy will be good again, household formation will occur and true, not stimulated demand will hopefully cause home prices to increase once again. While there was never a boom like this in housing before, there obviously was never a bust like this either.
And unfortunately, I'm sure that some of the comments from the Bloomberg article are going to be right on the money with regard to those extremely depressed housing areas so after all, I guess I'm lucky to live in Charleston.