July 24, 2008
Is The Real Estate Market Near The Bottom?
Jon Lansner certainly thinks so. His recent blog gives several indicators:
- OC home prices rose in June
- Increased sales rate
- Supply down
- And more
I’m not so optimistic. I don’t want to be the naysayer, but the number of low interest rates/arms set to expire from 2009-2011 and the home values certainly not rebounding in time to refinance makes me nervous that this is just the bottom of round I. I don’t think Round II will be quite as bad, but it certainly won’t help. That said, I think we still have some time before crying “bottom”.
CNNMoney.com reports that they think that there are several factors indicating the market has not yet hit rock bottom.
The factors that are weighing on the housing market remain in place - weak consumer confidence, a weak labor market and rising mortgage rates - so there are some strong fundamental headwinds still weighing on the market,” said Robert Dye, senior economist at PNC Financial Services Group.
“We are hoping for a bottom, but we are not expecting any significant rebound from that bottom until the labor market and consumer confidence starts to improve,” he added.
I have to agree there are too many unknowns and weaknesses in the market. Until we see some more strength from the consumer perspective, as well as a well-laid plan to account for the millions of homes that are doomed for foreclosure when the arms and interest rates rise in the next few years, things aren’t going to get much better.
Max D. said:
I’m going to say no.
July 24, 2008 8:54 PM
ASP said:
I would say NO also. We’re at least another year from seeing if we’re anywhere close to the bottom.
July 25, 2008 2:52 AM
Sheila said:
I knew I wasn’t the only one feeling that way! Too many signs indicate we’ve still got a stretch of road ahead of us…
July 25, 2008 6:10 AM
zia said:
I will say NO too, there is no way we hit the bottom, if buyer can’t get the loan, how they will buy such expensive houses/condos, there is no most of the first time buyers will come up with such a big down payment. A lot of people try to portray a rosy picture, but no sign till second part of 2009 or later.
July 25, 2008 10:14 AM
Dominic said:
I am surprised that Lansner would make such an amatuer analysis mistake. He concentrates on the reports of relatively typical month to month seasonal increases. He should be putting much more weight on the stories of year-ago comparisons which are much more dismal and more accurately reflect how the market is doing. It is hard to believe he actually believes we are near bottom. But many people in the news business are not economic wizards, so I guess his comments are not stunning.
July 25, 2008 10:43 AM
Richard said:
Don’t think so:
Unemployment still rising, even in the OC - real estate, mortgage, banking, title services, insurance, construction, building supplies, all pointing downward.
Mortgage rates rising - there’s not even enough money to bail them all out (Fannie, Freddie, banks) - let alone to lend - FHA tightening up its standards - loans will be available for only those with the best credit and 10/20% down. In fact, we may have seen a “dead cat” bounce from those who are worried about the rising rates.
Supply is “down” only because the banks can’t process the defaults fast enough and get the REOs back on the market. I think supply will actually be relatively steady (so I guess it may have bottomed) over the longer term, with banks bringing more on to replace those that have been sold, and with worst economic environment that means prices will continue to fall, although not as precipitously as we have witnessed thus far.
July 26, 2008 8:46 AM
Sheila said:
Richard - Great thoughts! I totally agree with just about all of it. Even with this new plan the government is pushing - I don’t think it’s going to make much of a dent in things.
I don’t think people are aware of just how many homes are sitting in foreclosure but can’t be processed fast enough to get on the market!
July 26, 2008 9:02 AM