An Expert Looks at the Future Of Real Estate
As far as housing markets go, this summer is a bust. Pending sales of existing homes are down, and sales of new homes have plummeted. Foreclosures in the first half of the year rose in 75 percent of metropolitan areas. And while mortgage interest rates hit record lows (again!), fewer people are able to refinance thanks to declining home prices.
I discussed the state of the real estate market recently with
The guidance they're paying for isn't that cheering: Burns' economic report cards of late have awarded mostly Cs, Ds, and Fs to various aspects of the housing market. (You can see his latest report card here: http://www.realestateconsulting.com/free-stats-us.html)
Here are some of the things he's thinking about these days:
What's the biggest problem currently facing the housing market?
"The problem now is the underlying demand for housing that is affected by job growth and mortgage rates. What is different is that we have job growth, and mortgage rates are increasing, but the demand for housing is down because the prices are too high.
"(We look at the number of) months of supply of homes, which is a ratio of sales volume to home sales. Right now we have nine months of sales supply, which is two months above average. And that may be changing to 11 to 13 months, which is a risk" to the housing market.
What is your best advice for buyers and sellers?
"The amazing positive in the market is affordability. I do question whether sellers are selling to rent, selling to buy a new home or relocating? If they are selling to buy in the same market, they are not playing the market.
"Relocating is a more interesting opportunity. For example, if someone in the Northeast wants to retire in
"Some people think they can time the market perfectly, but you can't."
Where's the best market for new construction right now?
What does the road to recovery look like for the housing industry?
"We can't be too optimistic because right now we're bouncing along the bottom, but long-term views are important.
"Right now, we're seeing the forming of new households. Developers have stopped building new homes, but there is lower vacancy because people are forming households, which can lead to new construction projects later on."
How do immigrants affect the U.S. housing market?
"The U.S. is still a great place to live, especially if you live south of the border. We think it is tough to live now (with the recession), but there are more opportunities here, so we will continue to see immigrants (come to this country).
"Immigrants tend to rent first, but eventually they buy houses. So first they help the apartment market, and then they help the housing market."
What part of the housing market isn't recovering?
"Unsuccessful loan modifications have created a situation where 8 million homeowners are not paying their mortgage and most will probably lose their houses."
What's happening with distressed property, like foreclosures and short sales?
"There is a tremendous appetite to take advantage of the distressed market, and people see that. There may be a dearth of home sales and banks trying to modify loans."
Where will we be in six months?
"In six months it will be February, so the housing market should be better. February will begin the spring selling season. Hopefully we see banks putting foreclosed homes on the market responsibly and not all at once or we may see a bigger problem" with foreclosures and declining home prices.
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Real Estate - An Expert Looks at the Future Of Real Estate
(c) 2010 Ilyce Glink, Real Estate Matters