Real Estate Matters

Although the US housing market from Florida to California have suffered price drops by 40 percent or more from their peak, a bottom is in sight nationally according to a report by Mark Zandi, chief economist for Moody’s Economy.com. “More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability,” the report says.

The outlook assumes stronger action by US policymakers and says that even with further government intervention; the recession will keep the housing market from fully recovering until the end of this year.

Chief economist, for Parsec Financial in North Carolina, James F. Smith predicted in a release by Chicagotribune.com that the downturn will end May 15^th, at the latest. Within a few months, Smith believes, the economy will be bouncing back. Housing will rebound first, then vehicle sales, consumer confidence and small-business optimism. The optimism puts Smith at odds with most of his fellow mainstream economists. However, Smith points to trillions of dollars on the market sidelines, pent-up consumer demand and the likely stimulus package as signs for improvement. We’ll see if improvements come that quickly, but hey, I hope he’s right.

According the National Association of Realtors, pending home sales increased in December as more buyers took advantage of improved affordability conditions. Lawrence Yun, NAR chief economist, explained that pending sales in December rose 6.3 percent, which was a modest rebound from November. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month”, he said.

“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun added.

Another source for positive economic signs is a new release from the University of Florida Research Center which stated the consumer confidence among Floridians inched higher in January after a large increase from November to December. “Breaking a four month trend downward, perceptions of personal finances now compared to a year ago rose five points from last month’s record low”, the report stated.

As I mentioned in previous blogs, locally, sale pending contracts continue to increase while inventory continues to decline in Sarasota, which is a positive development and hopefully will soon usher in a stronger economy for us.

Cheers,

Bill Geller