Excerpted from Keeping Current Matters and reprinted with permission.
R. Talbott, previously a Goldman Sachs investment banker, is a bestselling author and economic consultant. When it comes to the housing market he is also a prophet. When housing prices started to skyrocket in 2003, he published The Coming Crash in the Housing Market correctly warning us that a real estate bubble was forming. Then in January 2006, he called the absolute peak of home prices in the US by releasing a new book, Sell Now! The End of the Housing Bubble.
Mr. Talbott, the person who accurately predicted the housing bubble and its bust, now has a new prediction – IT IS THE TIME TO BUY A HOME! In a recent article, Homes – Buy Now!, Talbott simply explains:
“I have been waiting for more than five years to offer this advice. It is now time in most cities across the country to buy a new home or refinance your existing home with thirty-year fixed rate mortgage debt.”
He goes on to explain that his conclusion is based on four different metrics, all of which favor buying today:
■ Home Prices Relative to Peak Prices During the Bubble
■ Home Prices Relative to Construction Costs or Replacement Costs
■ Home Prices Relative to Incomes and Rents
■ Home Prices in Real Terms, Not US Dollar Terms
Bottom Line, If the person who called the real estate bubble and its bust says now is the time to buy, we believe it is time to buy.
As I mentioned in another recent blog, our local market is starting to show some signs of recovery. Inventories of houses for sale in some selected parts of Delaware County are dipping back into Seller's Market territory (defined as 1-4 months of inventory).
That is not yet reflected in any county wide trends, but at the end of 2011, there were 3,320 single family houses for sale in Delaware county. That is down from over 4,000 in July so the trend is in the right direction.
Wednesday, January 25, 2012
Tuesday, January 24, 2012
Real Estate 2012: Many Positive Outlooks
Excerpts reprinted with permission from "KeepingCurrentMatters.com"
There is a growing belief among many experts that 2012 will be the year housing turns the corner and starts heading in a more positive direction. Whenever we write a post like this, we unleash the hordes of critics who say we are again wearing rose colored glasses or are puppets being controlled by the National Association of Realtors (NAR) and other industry groups.
It is for that reason that we want to share the beliefs of other organizations in this post.
Washington Post:
“Housing Market and Economy Showing Encouraging Signs.” For the complete article please go to
The Wall Street Journal:
“From Bottom Up, Signs of Housing Recovery”
USA Today:
“Housing Outlook is More Upbeat”
CoreLogic:
“CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.”
Freddie Mac:
“With the New Year comes a sense of cautious optimism. There are some positive signs in the job market and consumer confidence; housing is starting to raise hopes for continued gradual economic recovery.”
Fannie Mae:
“The housing sector will likely take incremental steps forward in 2012 …according to economists at Fannie Mae.”
What does it all mean? Well like any forecast, the only thing we know for sure is that it is WRONG. We do not know if it is wrong on the high side, wrong on the low side, wrong early or wrong late. But, the significant thing is probably that after years of Gloom and Doom, a lot of people who make their livings forecasting real estate trends are turning bullish.
Will it happen, time will tell. My read is that the consensus is that we will hit bottom sometime in the first half of 2012.
There are some signs that this is already happening in our immediate area. For example, inventory of houses in Broomall, zip code 19008, priced from $250,000 to $350,000 is about 3 months (10 houses selling each month and 32 for sale). In Springfield, zip code 19064, in the $175,000 to $250,000 price range, there is about a 4 month supply (30 houses for sale, selling 7-8 a month). That is getting back into seller market territory. (Under 5 months of inventory is defined aas a seller's market where there are more buyers than sellers and there is upward pressure on prices).
Will that continue or are we just seeing some statistical anomalies. Time will tell, but I think we are about to turn the corner.
There is a growing belief among many experts that 2012 will be the year housing turns the corner and starts heading in a more positive direction. Whenever we write a post like this, we unleash the hordes of critics who say we are again wearing rose colored glasses or are puppets being controlled by the National Association of Realtors (NAR) and other industry groups.
It is for that reason that we want to share the beliefs of other organizations in this post.
Washington Post:
“Housing Market and Economy Showing Encouraging Signs.” For the complete article please go to
The Wall Street Journal:
“From Bottom Up, Signs of Housing Recovery”
USA Today:
“Housing Outlook is More Upbeat”
CoreLogic:
“CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.”
Freddie Mac:
“With the New Year comes a sense of cautious optimism. There are some positive signs in the job market and consumer confidence; housing is starting to raise hopes for continued gradual economic recovery.”
Fannie Mae:
“The housing sector will likely take incremental steps forward in 2012 …according to economists at Fannie Mae.”
What does it all mean? Well like any forecast, the only thing we know for sure is that it is WRONG. We do not know if it is wrong on the high side, wrong on the low side, wrong early or wrong late. But, the significant thing is probably that after years of Gloom and Doom, a lot of people who make their livings forecasting real estate trends are turning bullish.
Will it happen, time will tell. My read is that the consensus is that we will hit bottom sometime in the first half of 2012.
There are some signs that this is already happening in our immediate area. For example, inventory of houses in Broomall, zip code 19008, priced from $250,000 to $350,000 is about 3 months (10 houses selling each month and 32 for sale). In Springfield, zip code 19064, in the $175,000 to $250,000 price range, there is about a 4 month supply (30 houses for sale, selling 7-8 a month). That is getting back into seller market territory. (Under 5 months of inventory is defined aas a seller's market where there are more buyers than sellers and there is upward pressure on prices).
Will that continue or are we just seeing some statistical anomalies. Time will tell, but I think we are about to turn the corner.
Friday, January 20, 2012
Overwhelming Sentiment, Now Is The Time to Buy
Research Institute for Housing in America did a recent survey among a wide spread of age groups, to include both renters and home owners. Question that was asked was, "Is This a Good Time To Buy a House? (Excerpted with Permission of KeepingCurrentMatters.com)
The results of this survey, in terms of Home Owners who agree and Renters who agree are.
Under Age 30 - 81% and 83%
Ages 30-39 - 83% and 60%
Ages 40-49 - 83% and 72%
Ages 50-59 - 78% and 48%
Ages 60-69 - 82% and 60%
Ages 70-79 - 76% and 60%
Ages 80+ - 74% and 88%
Couple these sentiments with two other major major factors, namely:
Prices are still soft, though there is some evidence that we have reached the bottom.
Interest rates are at levels not seen for decades and probably have only one way to go and that is up.
And we have an overwhemingly positive case that now is the time to buy.
Would appreciate your comments and questions. Thanks for reading.
The results of this survey, in terms of Home Owners who agree and Renters who agree are.
Under Age 30 - 81% and 83%
Ages 30-39 - 83% and 60%
Ages 40-49 - 83% and 72%
Ages 50-59 - 78% and 48%
Ages 60-69 - 82% and 60%
Ages 70-79 - 76% and 60%
Ages 80+ - 74% and 88%
Couple these sentiments with two other major major factors, namely:
Prices are still soft, though there is some evidence that we have reached the bottom.
Interest rates are at levels not seen for decades and probably have only one way to go and that is up.
And we have an overwhemingly positive case that now is the time to buy.
Would appreciate your comments and questions. Thanks for reading.
Wednesday, January 18, 2012
Where are House Prices Headed in 2012
There is no shortage of opinions as to where home prices are headed in 2012. From Clear Capital’s expectation that prices will show a ‘slight uptick’ this year to Fitch’s projection that prices ‘will fall another 13 percent’, there seems to be no consensus as to where real estate values are headed. How can there be such a disparity of opinion among industry experts? Prices are determined by the relationship between supply and demand and there are many unanswered questions regarding both of these components.
Questions about Demand
Will this be the year that the 5.9 million adults between the ages of 25 and 34 that are still living with their parents decide to purchase a home of their own?
With mortgage payments lower than rent payments in the majority of the country, will first time buyers finally decide it makes more financial sense to buy rather than rent?
Will the baby boomers take advantage of the great deals available and start purchasing vacation and retirement homes?
Will investors continue to purchase large quantities of distressed properties?
Will hedge funds negotiate a deal with the banks for bulk purchases of foreclosures?
Questions about Supply
Will 2012 be the year that builders again increase inventories of newly constructed homes?
Will baby boomers put their primary residences up for sale and relocate to their retirement destinations?
Will 2012 be the year that the shadow inventory of foreclosures finally makes its way to market?
If prices depreciate, it will force more homes into a negative equity situation. Will this create another surge in short sales and foreclosures?
Will the government put together a plan to convert large numbers of foreclosures into rental properties?
Bottom Line
With so many unanswered questions regarding both the demand for housing and supply of properties, it is very difficult to determine where prices will be at the end of the year. We suggest you contact a local real estate professional to help you determine where values are headed in your area.
Real Estate really is a local proposition and conditions vary a lot from market to market. If you have a question about house prices and the direction in your area, I can help. Just give me a call at 484-574-4088 or email to John@JohnHerreid.com
Above body reprinted with permission from Keeping Current Matters.
Questions about Demand
Will this be the year that the 5.9 million adults between the ages of 25 and 34 that are still living with their parents decide to purchase a home of their own?
With mortgage payments lower than rent payments in the majority of the country, will first time buyers finally decide it makes more financial sense to buy rather than rent?
Will the baby boomers take advantage of the great deals available and start purchasing vacation and retirement homes?
Will investors continue to purchase large quantities of distressed properties?
Will hedge funds negotiate a deal with the banks for bulk purchases of foreclosures?
Questions about Supply
Will 2012 be the year that builders again increase inventories of newly constructed homes?
Will baby boomers put their primary residences up for sale and relocate to their retirement destinations?
Will 2012 be the year that the shadow inventory of foreclosures finally makes its way to market?
If prices depreciate, it will force more homes into a negative equity situation. Will this create another surge in short sales and foreclosures?
Will the government put together a plan to convert large numbers of foreclosures into rental properties?
Bottom Line
With so many unanswered questions regarding both the demand for housing and supply of properties, it is very difficult to determine where prices will be at the end of the year. We suggest you contact a local real estate professional to help you determine where values are headed in your area.
Real Estate really is a local proposition and conditions vary a lot from market to market. If you have a question about house prices and the direction in your area, I can help. Just give me a call at 484-574-4088 or email to John@JohnHerreid.com
Above body reprinted with permission from Keeping Current Matters.
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