6 Months of Gains

27
Jan

According to the S&P, home prices have had six straight months of gains. Well, at least for 14 out of 20 principle metro areas. Sorry if you don’t live in an “up” city. But I just report the facts, I don’t make them.

However, home prices are just part of the picture, says the chairman of the S&P index committee. Apparently price gains slowed in November. So while prices are rising, they are slowing.

However, for some major cities in the study, annual figures showed that they had finally reached positive territory. This hasn’t been seen in 2 years in cities like Dallas, Denver, San Diego, and San Francisco.

So what can we take from this information? Prices seem to be stabilizing, but they don’t necessarily indicate a sustainable recovery.

More time is needed to see if the gains that have been achieved can be maintained. We seem to be at pre-housing-bubble levels. Can we achieve the heights we saw previously, this time with a more stable foundation?

That data will be forthcoming after the first quarter stats of 2010 come in.

http://thejoywilligroup.com Joyce W., Maryland

Preston’s Blog: “More time is needed to see if the gains that have been achieved can be maintained. We seem to be at pre-housing-bubble levels. Can we achieve the heights we saw previously, this time with a more stable foundation?”

My response: I agree with a comment made about “companies need to start hiring again” and to add to that, and pay well. I am a recipient of getting a job after 1 1/2 of seeking and getting paid 60% less than I was making 1 year previously. That is a shame! My answer is NO we will not achieve heights we saw previously until the attitudes of big business spending change. Family value needs to be restored back into big business. It’s still about how much the CEOs can make and not about the employees. A change must happen before the housing market can get better.
Terrell M., NC

I don’t know whether or not to agree with the banks’ reports. What constitutes a ‘gain?’ At least a percentage point? A percentage of a percentage point? I could go on… REO lists from banks are getting longer. More homeowners seem to be missing payments. More employees seem to be losing their jobs. I tend to believe that the housing market will continue on a downward spiral for a much longer period than is being reported.
Mark E., Florida

Real estate is a localised market, where one neighborhood, or area within the state can do better than the other, regarding sales and resilience to significant down turn in the value of the property. For instance, San Francisco and Marin Co ( on the north side of the Golden Gate Bridge) have been quite resilient, loosing a small value of their inflated pre-kaboom values, yet areas in the Sacramento Valley have been hit exceptionally hard. Here in Florida, Tampa has been hit hard (save a few communities) and homes have lost a significant amount of their value, leaving many borroweres upside down in theeir homes. People are loosing their jobs, have to short sell or go through forclosure proceedings on their property. This adds more homes to the already swollen inventory, and in turn will mean a longer period for a favourable turnaround in the housing market, ( and the commercial market). Some neighbourhoods, will tun around quicker than others. How long is mere speculation. I head of worse case scenario markets, may not begn to recover till 2015.
The upside is for us to get to the investors, and help them to take advantage of this, and stimulate the market
Jerry P.

Hi! Cory:

Looking on the positive side of this home deflation/inflation debacle.

This is absolutely another one of those best times in the history of an industry to invest in a tangible product like real estate and get rich.

If a person has money to invest in real estate in the next 5 years or less they will be wealthy.

History repeats it self often and again in real estate it will go full circle like it always in the past.

It’s just that the conditions and the standards will change.

Real Estate is the most solid investment even beyond stocks & securities over time.

If the stock market crashes you lose paper and liquid assets, but in real estate you will always have something tangible even in the event of the loss of some equity.

I look at this from the bright side instead of the gloom and doom.

I know it will change for the good perhaps in the not so near future, but it will surely change and get better again.

Regards, Jerry P.
Tom B. Texas

Here in the Dallas area we are seeing changes in the different “sub-markets”. The local paper just showed what housing has been doing. In the area I live it shows it as flat, in the area I own another property it shows a 10% decrease. In another area I am working it showa a 3% increase. So one needs to check it’s market and know wht areas are doing what. From what I have seen and heard from other investors these numbers seem to be true. I will just need to change my strategy and focus on another area for the time being. Hopefully we will continue to see this rise in value and be able to take advantage to help our business and prospective homeowners/renters find an affordable place to live. What are you all seeing in your markets?
http://www.yourpropertypurchasepeople.com JR

I would tend to agree with what Dan said in terms of a false manipulation of the markets. I would also state that the Obama admin has a lot of room to maneuver and change how they react to the banks they loaned money to in the bank bailout. Impose their wishes upon them or call their loans due and watch them do one of two things. File for BK protection or rush to pay their loans of also. Why do you think Bank of America paid their Tarp loan off? They didn’t want to be under the control of the federal government. I don’t blame them but I would venture to say in this particular environment we all have a part in the recovery and if some folks or entities don’t want to participate then keep complaining and rage against the inevitabel change that those that take advantage of right now will most undoubtedly do and become wealthy.

Jason K TX
rose randolph

I think it is going to be some time for things to change. I dont think they are doing enough to help, especially with people who are upside down on their loan. The loan mods are not working because they only extend the year of the loan and lower the interest which doesn’t deal with the upside down part. They have to lower the amount of the loan for a loan mod to really work. that is the only thing that is going to work.
rose r, california
Kristin B, California

It a mixed bag in many parts of the country, pretty wide swings in the county I live in & even within the nearby Metro city. Looks like there’s an upward trend that’s beginning to develop, but a sustainable one is a ways off. Not until the residential foreclosures get eked out of the system, the banking industry and government starts cleaning up it’s act, how clean it gets, I don’t think anyone’s holding their breath on those players. Even so with the general economy still very weak, the forthcoming Tsunami of commercial ARM’s coming due, dim prospects on re-fi’s, we’ll see how well private investment capital comes in those forclosures. So it looks like it’s up to people like us to create solutions to get the market flowing & figure out the best strategy in whatever particular market one’s working in, the opportunity doesn’t get any better than that.
Tim P

In general I believe the trend towards higher prices will continue, especially in areas where people want to travel… Florida in particular. People have never been able to buy properties at the prices they are getting them at now. It will take time and hopefully there is a stronger “foundation” for these prices and values to continue to rise. Other parts of the country may take a longer period of time… There is still a huge amount of foreclosures in the pipeline which tend to do one thing, bring the price and values down. It is going to take a while to get through all of this.

Tim P., North Carolina
http://www.ForeclosedPropertyInvesting.com Robert Prieto

Does S&P know the rule about supply and demand? Hello? Anyone?

There is such a large supply of housing right now that we will not see a significant change in the market until a goodly number of these homes being sold. That will only happen when either banks start making home loans more accessible or sellers start accepting creative transactions more readily.

Once the glut of available homes had been dimished, housing prices will rise naturally.

Robert P., California
Pete R. , Illinois

I think that small gains in realestate market is good for this economy. We should be very carefull at rate of increase so that we don’t return or prolong the current situation.
Prentiss K., Idaho

This software will allow anyone to see real estate profits in any type of market!
James W., California

A few years ago when loans were easy to get, prices began to rise out of control. In my town of Santa Maria the FHA insured loan has caused some of that same effect. Because of the ease of getting an FHA, coupled with the first time buyer tax credit, the buyer pool became so large that retail buyers were competing for homes. FHA and the tax credit have created a bit of the same effect that easy to get loans created a few years ago. If FHA loans are a harder to get and the tax credit goes away then I believe that home price gains will subside.
Kay M

The demographics are on our side IF (and it’s a really big IF) the job market can begin to rebound simultaneously. The Echo Boom, those kids between the ages of 16-30, are as large a generation as the original Baby Boomers. They’re getting out of college, just getting married, and just looking for places to live. Likewise, some Boomers, and certainly The Silent Generation, are in the market for smaller, more chic homes in large metro areas with an array of amenities.

So, the people are there. The reasons are there. The question is–is the money there? I believe that if the country can add about 1.5 million jobs this year (a pitifully small amount, mind you), and if those jobs are within the service and transportation industries, we’ll have a winner. Other industries will help (e.x., construction, factories, etc.), but the beauty of the first two is in the ripple effect that they have on the economy. We are no longer an industrial-based superpower, but a knowledge-based one with less reliance upon single large employers. If we get those sectors heated up again, then I think we can see the beginnings of another real estate climb. Otherwise, the prices will totter for awhile and fluctuate to a new bottom until we once again reach a curve of sustainable economic growth.
Cory B, Minnesota

Sorry but a jobless recovery and the very real threat of massive government spending, taxation and regulation will further slow economic growth. The longer the unemployment rate stays in double digit territory, the more likely we are to see a second dip or recession in the US economy. I think the price gains of late are tied to the stock market recovery and represent investor money moving not main street people buying homes. The fundamentals are just not there to sustain either the equity market or the housing market over the mid-term. Think what would happen if the Christmas bomber not been so inept. Our economy is on fragile footing still, it really wouldn’t take much of a shock to the system to grease the slope again.

I think the Short Sale business is in no danger of slowing due to rebounding prices. So go make hay while the Sun shines!!!
Marla M, Maine

Houses in my area have been selling..there is movement to be seen…they have sold often for under the asking price. We haven’t seen the worst, because I understand investors have about 20% of the marketshare that will plummet, just like the last meltdown last year. Still, I believe there are opportunities in any economy to make money. Someone will always need a roof over their head. It is up to us to find the opportunity, flexibility, and method to succeed.

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6 Months of Gains

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