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Housing May Be Making a Bottom

July 29, 2008 RSS Feed Print

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A bit of cheer from the econ team at Action Economics:

In total, the sales statistics for the U.S. real estate market may be forming a bottom as we digest the most recent bout of financial market stress in July, which would be a welcome relief for the beleaguered housing market. We are hardly out of the woods, however, and rising mortgage rates and recent turmoil may still disrupt this recent flattening pattern. The price data will inevitably lag the volume figures, though the rate of price decline for all but the S&P Case Shiller figures seems to have stabilized for now as well, in the 3%-6% [year-over-year] area. The construction figures are also exhibiting some early signs of stabilization.

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It is organizations such as yours that misread the signals for the real estate industry during the last few years. Real estate here in California Inland empire is still overvalued 20-35%. I live in a community where the homes sold in 2005 for 1.2 to 1.5 million. The house I live in was purchased for 1.5 million. The owner put 250k down. She has a 1,250,000 loan. Today three years later, the house could not sell for 750k. Out of 70 homes 20 are empty, up for sale or invarious stages for foreclosure. They move out at night because they are embarassed. Everyone in this gated community is upside down, paying 6-9k per month. I pay 3,250 per month to lease 5,000 sqft, 6 bedrooms 5 baths 4 car garage, gated community, no property taxes nor association fees. We have another 3 years (optimistic) to 5 years (pessimistic) to get out of this housing mess. The only way to end the pain would be for everyone upside down to walk away, and make the banks eat the mess they played a large part in creating.

M. Campbell, CPA, EA, MST, Broker of CA 4:18PM August 03, 2008

Aloha:
I am Broker in Charge at RE/MAX Honolulu. I don't see the bottom coming until around 2011 at the earliest.
Too many factors such as credit tightening, cost of the war, unemployment rising are far different factors than the last downturn which bottomed out in '95. This down turn is going to be more significant in negative numbers and last longer.
I track and post my statistics on my website at www.hawaiirealestatestatistics.com
I wish you much Aloha,
Mike Gallagher
Broker in Charge
RE/MAX Honolulu

Mike Gallagher of HI 1:50PM July 29, 2008

Housing May Be Making a Bottom

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