Everywhere I turn, I hear analysts talk about how the economy is on the upturn, and the housing market is on the mend. I don’t know about the economy, but I’m not buying that stuff about the rosy housing market.
Zillow’s chief economist Stan Humphries is now predicting the housing market won’t hit bottom until sometime in 2012. Home values have fallen for 57 consecutive months. Doesn’t sound very rosy to me . . . The full article containing this info appeared in the WSJ on May 9th. Here’s the link:
We saw the surge in home purchases last year, spurred by the $8000 tax credit, but when that expired in late summer, so did the breath of fresh air that had been pumped into home sales.
There’s just sooo much inventory out there, prices aren’t going anywhere soon. The glut of foreclosures on the market make it nearly impossible for someone to sell their home at anything near its true value.
Remember the cute three-bedroom ranch I bought a few months ago for $35,000? It’s on a cul-de-sac with other homes valued at $80-85,000. With that kind of (foreclosure) competition, those people can’t sell their homes right now.
So yes, the housing market is still tumbling down, but we investors are taking advantage. Really, anyone who has decent credit and wants to be a homeowner should be seriously looking to buy right now. However, the banks have tightened their purse strings — many are demanding a credit score in the 700s — — which makes it challenging for many to obtain a mortgage. How do we clear the huge inventory of homes on the market when very few are able to get loans? Cash is king, of course, but aside from the investor segment, there aren’t many potential buyers who can pay cash for their home. Definitely a “catch 22” situation!
What I know is this: there’s a huge inventory of wonderful homes out there — single- and multi-family — a lot of value for a little money. These prices are going to bump along the bottom for at least nine more months. And I plan to take full advantage.
How ’bout you?