For some time now, we have attempted to shed light on the fact that pricing in today’s real estate market will be determined by the concept of ‘supply and demand’. If supply continues to increase and demand softens (or even remains constant) prices will continue to fall. Even the National Association of Realtors (NAR) has acknowledged this to be true.
The supply of inventory in the real estate industry is defined by the current months’ supply of homes that is available for sale. There are no steadfast rules that will apply to every category of housing. However, here is a great guideline by which to go:
1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
5-6 months’ supply creates a balanced market where historically home values appreciate at a rate a little greater than inflation.
7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.
Where do we stand today?
According to NAR’s most recent Existing Sales Report, there is currently a 10.5 months’ supply of homes for sale. We can see, based on the guideline above, we are in a buyers’ market and that prices will continue to soften. The other statistic we must watch is the number of months’ of shadow inventory which will be coming to market.
CoreLogic just released their November report (which covers August). They estimate shadow inventory:
… by calculating the number of properties that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders and that are not currently listed on multiple listing services (MLSs). Shadow inventory is typically not included in the official metrics of unsold inventory.
The report showed that shadow inventory jumped more than 10% in the last year, pushing total unsold inventory to 2.1 million houses.
That represents another 8 months of supply.
The Wall Street Journal reported that some analysts have said CoreLogic estimates look rather low.
Laurie Goodman, senior managing director at Amherst Securities Group, has warned that as many as seven million homes could end up in banks hands unless more aggressive modification regimes are put in place.
Barclays estimates that another 3.76 million homes are either in the foreclosure process or are at least 90 days delinquent but not yet in foreclosure.
Bottom Line
Most industry experts are projecting just that – an additional fall in prices of between 5-20%. Mark Fleming, chief economist for CoreLogic commented:
“The weak demand for housing is significantly increasing the risk of further price declines in the housing market. This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.”
If you are thinking of selling, meet with a local real estate professional immediately. In most parts of the country, selling sooner may be better than later.
Showing posts with label housing market. Show all posts
Showing posts with label housing market. Show all posts
Tuesday, November 30, 2010
Wednesday, September 9, 2009
Behind FHA Strains, a Push to Lift Housing
Interesting article...and it definitely shows that the public's demand is there as in the case of California accounting for 13% of all FHA loans in July! California areas have FHA loans to $729K...people want to buy if we can find a way to get them money! Jumbo money needs to be more available!
Wednesday, February 18, 2009
Housing Stimulus Initiative
Hello All!
I just finished my last meeting this morning, and will be returning tomorrow...It has been GREAT!
As you are probably aware, the Housing Stimulus Initiative lead by Johnny Isackson was denied in the overall package, and they simply changed the original version of the $7,500 tax credit to first time homebuyers...
Here is what the changes, of what we understand right now, mean:
- $8,000 Tax Credit for FIRST TIME HOMEBUYERS only (increase of $500)
- Does NOT need to be paid back (considerable change)
- Begins on purchases as of January 1st, 2009
- Only available to an individual earning less than $75k, and couples up to $150k
That is a quick breakdown...Not at all what was hoped for, BUT there may be more to come...MAYBE!
NAR is lobbying to push a separate initiative specifically to address the housing situation...this will be pushed over the next two weeks.
Apparently, President Obama has indicated to NAR that the first step was to address the Economy, and then address the housing scenario.
NAR is working very close and hard to get other initiatives forward...they will probably not be exactly what we believe will stimulate enough, but every step will be a step further than where we are today...
Over the next week, the full details will be understood in clear detail, but for now, what is above is the closest I can get an understanding of...
THIS IS SOMETHING YOU NEED TO UNDERSTAND AND EMAIL TO YOUR FRIENDS AND CLIENTS!!!!!
Friday, January 30, 2009
Some Good News
Sales of existing homes posted an unexpected increase last month, closing out the worst year for the U.S. real estate market in more than a decade.The National Association of Realtors said Monday that sales of existing homes rose 6.5% to an annual rate of 4.74 million in December, from a downwardly revised pace of 4.45 million in November.
The results were better than expected. December's sales had been forecasted to fall to a pace of 4.4 million units, according to Thomson Reuters.Buyers were taking advantage of dramatically lower prices, especially in distressed markets like California, Florida and Nevada, where foreclosures have swamped the market.The nationwide median sales price plunged to $175,400, down 15.3%pe from $207,000 a year ago. That was the lowest price since May 2003 and the biggest year-over-year drop on records going back to 1968.
"The economy just simply cannot recover as long as home prices continue to decline," said Lawrence Yun, the trade group's chief economist, who called on lawmakers to include tax credits for home buyers in the economic recovery package being considered by Congress.For all of 2008, there were 4.9 million existing home sales, down more than 13% from a year earlier, and the lowest total since 1997.
And another encouraging sign -- the number of unsold homes on the market in last month fell nearly 12% to 3.7 million. At the current sales pace, it would take 9.3 months to sell all the properties, down from 11.2 months in November.
-Wall Street Journal
The results were better than expected. December's sales had been forecasted to fall to a pace of 4.4 million units, according to Thomson Reuters.Buyers were taking advantage of dramatically lower prices, especially in distressed markets like California, Florida and Nevada, where foreclosures have swamped the market.The nationwide median sales price plunged to $175,400, down 15.3%pe from $207,000 a year ago. That was the lowest price since May 2003 and the biggest year-over-year drop on records going back to 1968.
"The economy just simply cannot recover as long as home prices continue to decline," said Lawrence Yun, the trade group's chief economist, who called on lawmakers to include tax credits for home buyers in the economic recovery package being considered by Congress.For all of 2008, there were 4.9 million existing home sales, down more than 13% from a year earlier, and the lowest total since 1997.
And another encouraging sign -- the number of unsold homes on the market in last month fell nearly 12% to 3.7 million. At the current sales pace, it would take 9.3 months to sell all the properties, down from 11.2 months in November.
-Wall Street Journal
Wednesday, December 17, 2008
Talk LIKE Terry
The market is changing! The problem with what we are facing is that nobody realized what the next wave was going to be…It is now the economy and joblessness that is our nemesis!
What can you do? You need to understand all of the factors that circle around the fears of people you may be dealing with. It is the absolute best time you could ever think of buying a home if you are in the position to do so…you have to feel this, and let go of your fear!
I have learned that if you ultimately worry so much about something, it will ultimately come true! This goes true for positive, steadfast visions too! Which path are you on? It is not too late to switch if you are on the wrong one…but you must make a decision to change!
This is going to break down some of the trends that are vitally important for you to be able to discuss with people and understand how to effectively communicate with someone.
Should you have any questions, or need more information, please contact me, and I will be more than happy to help!
The reality is that homes ARE selling! Maybe not as many as we would like to see, but they are selling…the key is to be that much smarter and take a bigger piece of the pie!
There is some good news for re-sales…there are very few builders building, and your new home supply is shrinking fast! Our inventory for Atlanta has dropped TWENTY THREE PERCENT from a little over a year ago! Study your area, and know it better than ANYBODY!
Wednesday, December 10, 2008
Gas in the Turn! GET RESULTS!
In race car driving, the top earners make their money in the turns. While most people would think to take the foot off the gas, or put their foot on the breaks, the top performers are pushing the gas and making their passes. Now is the time to learn what race car drivers already know, and apply it to the real estate market/housing market…now is the time to accelerate, while others are scared, and putting on the brakes! The money is made in the turns…ACCELERATE NOW!
There are many signals to identify that the bottom has been reached in the housing market, and there are finally positive articles coming out regarding the pace of sales getting better. More importantly, most every financial wizard is telling people to “BUY REAL ESTATE NOW!” You must remember, these are the same people that have been saying “do not buy real estate” for 2 years!
The following facts are happening now, and they will help form the turn in the near future:
1. The Bailout ($700 Billion) is taking place, and will be filtering into the credit market…this will create the floor of pricing and help in confidence of the general public
2. Oil has dropped to the mid $60’s per barrel (it was $147/barrel in July!)! This will help with energy bills over the winter, and keep our houses monthly bills lower
3. In Atlanta, Gas is in the $2.30’s, and was over $4.00/gallon just 2 months ago! June is when the brakes could be felt, and gas had just reached $4.00/gallon
4. Interest rates are still incredibly low, and will most likely stay here for a while
5. Fannie Mae and Freddie Mac have been taken over, and will be adjusted to be stronger and be able to make more loans to more people than what was beginning to happen
6. Supply of homes is coming down in most areas…Atlanta is about 10 to 12% lower than its peak about 1 year ago
7. Builders are not building as much (dramatically down), and what is being built today has been adjusted for being deals in today’s climate
8. Financially challenged banks are being shut down and taken over by the FDIC…this is bad right now, but the good will emerge from the FDIC regulating and selling off the bad assets at attractive prices and stimulating more sales…this simply needed to happen
9. Recession talk…who would not think we would not be in a recession?! Banks haven’t been able to loan as many people money…people have been losing jobs…stock market going crazy…how in the heck could we not be in one…and when we know we are in one, is when we are digging out of it!
10. Election will be done! It does not matter if it is Republican or Democrat, the 50% of the Nation that was scared of who/what will embrace the reality of the next 4 years and move on…they are waiting to see right now!
Educate your buyers that they have 3 to 6 months to get the best deals…and then the market is going to be moving up due to reasons 1 – 10 above. Remember, it is riskier to buy at the top of the market vs. buying at the bottom…we are nowhere near the top, and most likely at the bottom…BUY NOW for investments!
Big change does not happen overnight…it takes time for these to filter out into the minds of the general public. The general public also must see the changes happening prior to believing them. If you have all 10 facts happening above, and give them 3 to 6 months to begin to make change, just imagine what good effect that can have on the housing market.
If you are in the game of real estate, you better get into the game!
The old way of having people like you because of your personality, and you being able to profit from it is gone! This will still get you leads, but you will not be equipped to speak the new language and lead people where they need to go. You will be stuck with indecisive buyers waiting on the bottom, and overpriced listings believing their home is worth last year’s pricing…good luck on this plan!
What are we doing as a company? INVESTING our time, energy, and money into programs, training, systems, and internet strategies to be in the lead coming out of the turn…WE ARE PRESSING ON THE GAS!
The message over the next two months (while others will be petrified, and putting on the brakes) is “GAS IN THE TURN…GET RESULTS!” You need to get into it…eat it, breathe it, sleep it, live it! The turn in North Atlanta begins with YOU! Wrap your head around 1 – 10 above, and understand it so you can talk knowledgably about it…GAS IN THE TURN…GET RESULTS!
There are many signals to identify that the bottom has been reached in the housing market, and there are finally positive articles coming out regarding the pace of sales getting better. More importantly, most every financial wizard is telling people to “BUY REAL ESTATE NOW!” You must remember, these are the same people that have been saying “do not buy real estate” for 2 years!
The following facts are happening now, and they will help form the turn in the near future:
1. The Bailout ($700 Billion) is taking place, and will be filtering into the credit market…this will create the floor of pricing and help in confidence of the general public
2. Oil has dropped to the mid $60’s per barrel (it was $147/barrel in July!)! This will help with energy bills over the winter, and keep our houses monthly bills lower
3. In Atlanta, Gas is in the $2.30’s, and was over $4.00/gallon just 2 months ago! June is when the brakes could be felt, and gas had just reached $4.00/gallon
4. Interest rates are still incredibly low, and will most likely stay here for a while
5. Fannie Mae and Freddie Mac have been taken over, and will be adjusted to be stronger and be able to make more loans to more people than what was beginning to happen
6. Supply of homes is coming down in most areas…Atlanta is about 10 to 12% lower than its peak about 1 year ago
7. Builders are not building as much (dramatically down), and what is being built today has been adjusted for being deals in today’s climate
8. Financially challenged banks are being shut down and taken over by the FDIC…this is bad right now, but the good will emerge from the FDIC regulating and selling off the bad assets at attractive prices and stimulating more sales…this simply needed to happen
9. Recession talk…who would not think we would not be in a recession?! Banks haven’t been able to loan as many people money…people have been losing jobs…stock market going crazy…how in the heck could we not be in one…and when we know we are in one, is when we are digging out of it!
10. Election will be done! It does not matter if it is Republican or Democrat, the 50% of the Nation that was scared of who/what will embrace the reality of the next 4 years and move on…they are waiting to see right now!
Educate your buyers that they have 3 to 6 months to get the best deals…and then the market is going to be moving up due to reasons 1 – 10 above. Remember, it is riskier to buy at the top of the market vs. buying at the bottom…we are nowhere near the top, and most likely at the bottom…BUY NOW for investments!
Big change does not happen overnight…it takes time for these to filter out into the minds of the general public. The general public also must see the changes happening prior to believing them. If you have all 10 facts happening above, and give them 3 to 6 months to begin to make change, just imagine what good effect that can have on the housing market.
If you are in the game of real estate, you better get into the game!
The old way of having people like you because of your personality, and you being able to profit from it is gone! This will still get you leads, but you will not be equipped to speak the new language and lead people where they need to go. You will be stuck with indecisive buyers waiting on the bottom, and overpriced listings believing their home is worth last year’s pricing…good luck on this plan!
What are we doing as a company? INVESTING our time, energy, and money into programs, training, systems, and internet strategies to be in the lead coming out of the turn…WE ARE PRESSING ON THE GAS!
The message over the next two months (while others will be petrified, and putting on the brakes) is “GAS IN THE TURN…GET RESULTS!” You need to get into it…eat it, breathe it, sleep it, live it! The turn in North Atlanta begins with YOU! Wrap your head around 1 – 10 above, and understand it so you can talk knowledgably about it…GAS IN THE TURN…GET RESULTS!
Subscribe to:
Posts (Atom)
