Is the Housing Market Poised for Recovery?

Is the Housing Market Poised for Recovery?

Posted on 10. Jul, 2012 by in Real Estate

It does seem like a backward compliment when real estate analysts are cheering because housing prices fell in March 2012, but not as much as they were expecting. The Wall Street Journal said that this “…offered fresh evidence of a real-estate market on the mend.” They quoted David M. Blitzer, chairman of the Index Committee at Standard & Poor’s Indices, who was trying his best to put a positive spin on the housing market in general. “This is the first flat report we’ve had in quite some time [hip, hip hooray], and while there has been improvement in some regions, housing prices have not turned everywhere.”

According to Standard & Poor’s, home prices actually improved from year-ago levels in seven (7) metropolitan areas. Phoenix, Minneapolis, Charlotte, North Carolina, Denver, Detroit [after falling off a cliff] and Dallas, Texas all saw improvement from March 2011. Phoenix went up 6.1% and the other six areas inched higher by 1.5% to 3.3%. Not exactly a stellar rebound! Thirteen (13) metropolitan have continued their downward spiral. But the “good news” is that in only two of those areas, Atlanta, GA (down almost 18%) and Chicago (down 7%) did prices fall more from their year-ago levels in March than they had in February.

Now Let’s Talk Reality and the Real World

This is just like tracking the unemployment rate in the U.S. The federal government’s official number would have us believe that nationwide unemployment is around 9%. Yet when I’ve interviewed state and local officials about the real jobless numbers, including those who are under-employed and those who have stopped looking for work I get other figures. Depending on the region and metropolitan area, that real unemployment number is somewhere between 11% and 20% according to these anecdotal reports.

Recently I spoke with two bank officials from two of the big banks who are working to expedite the so-called “mortgage loan modification program,” a.k.a. home loan modification. In candid and anonymous discussions, they told me that they’re hosting seminars and training programs across America to help people fill out the paperwork and apply for help. Why? Because there are so many people who’ve defaulted on their mortgages and need an expeditious way to keep from losing their homes to foreclosure.

They also admitted to me that in many seriously impacted states, including some of the nation’s most populous like California and Florida; 50% or more of foreclosed houses are being withheld from being sold or are legally tied up from being placed on the market. Why? Because the supply of unsold homes and the number of qualified buyers are at record opposites—the number of unsold homes is actually growing and the number of qualified buyers is way down.

If too many foreclosed homes were released for sale at the some time, true market prices for houses would take a serious hit downward. This is a controversial topic, but when I hear it directly from the people who are out there in the real world dealing with the magnitude of this ongoing mortgage and housing crisis, I pay attention. According to The Wall Street Journal article from May 30, 2012 titled “Housing Market Crawls Back”, there is evidence to the contrary. “Research and forecasting firm Capital Economics echoed that [‘the worst is over’] sentiment saying ‘U.S. house prices have now found a floor.’ “Indeed, sellers willing to list their homes at prices down sharply from their peak six years ago are finding more offers than they did last year,” the Journal article claimed.

It is true that in some areas things are getting somewhat better and sales are happening, albeit at distressed prices. In West Coast areas like parts of Southern California, the market does appear to be stabilizing. I just returned from a trip to Santa Barbara and saw for myself evidence of this. The Greater Portland, Oregon area is also seeing more buying and sales closings than at this time last year. The Journal article quoted a real-estate investor who resells foreclosed properties he buys from banks in five Southern California counties.

He was quoted as saying, “The market is stabilizing. Prices have continued to fall and fall and fall, but right around December [2011] buying activity and renting activity really picked up at a pace we haven’t seen in several years.” If you’re a person who needs to sell their home, a landlord with vacancies or a property manager who’d like to expand their book of business, let’s hope he’s seeing things as they really are.

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