Housing Market Forecast
The housing market can be tough to get a handle on.
Housing prices are at mid 1990′s level, thus making owning a home more affordable than recent years. In addition, mortgage rates have consistently been around the all time record low levels of 4%. Given the affordability of the houses and the low cost of getting a loan, you would think that the housing market was flourishing.
Another factor that should be having a positive effect on the housing market is the level inventory. There are currently 20% fewer houses on the market than this time last year. Lesser supply, lower prices, and lower lending costs should lead to a booming housing market, right?
“On paper, all of the conditions are great for buying, but the reality doesn’t seem to match that,” said Ross Kutash, a 37-year-old attorney who has looked at more than three dozen homes in different suburbs of Los Angeles. “I wouldn’t describe it as a buyer’s market so much as no market at all.” http://online.wsj.com/article/SB10001424052970204774604576631381117760982.html?mod=wsj_share_tweet
Then why is the market struggling? While I’ve written countless articles detailing the difficulty of trying to acquire a loan and sell your home without paying a lot of money, the housing market forecast isn’t looking good for yet other reasons, which will be detailed in this article.
Housing Market Forecast | Challenges
One of the reasons that the housing market forecast is so dismal is due to artificially low supply.
This September definitely foreshadowed the cloudy housing market forecast, as documented in a recent Wall Street Journal article:
There were more than 2.19 million homes listed for sale at the end of September, down 20% from a year earlier, according to a new report from the real-estate website Realtor.com. That is the lowest level since the company began its count in 2007.
First, many banks are holding onto inventory in an effort to not overload the market with low end houses and crash the housing market altogether.
Second, many of the homes on the market just aren’t attractive to potential buyers. It’s estimated that anywhere from 1/3 to 1/2 of the homes available for sale are distressed homes. These homes aren’t in the best condition and may have been abandoned for quite some time. These homes may also be located in less than appealing neighborhoods or poor school districts. Therefore, many of the available, lower priced homes on the market don’t interest the potential end buyer due to lack of attractiveness.
Finally, a large amount of homeowners out there with attractive homes that would be interested in selling their homes are having second thoughts because they don’t want to give away their properties for such ridiculously low prices. In many cases, these low prices have eaten away all of the owner’s equity. If they sold using a conventional method (Realtor to end buyer with mortgage), they would have to come out of pocket to sell their houses. Most of these distressed homeowners are distressed because they don’t have jobs or excess savings. Asking folks with ‘unsellable’ houses to come out of pocket to sell a house versus simply allowing the home to go to auction is a difficult choice many are facing, and unfortunately, the latter is becoming the solution.
It is so tough out there that some real estate agents out there are going to unheard of lengths to increase the likelihood of a sale. Check out this article about a real estate agent in Harlem that’s dropping the asking price for an old brownstone building by $1,000 a day just to get some leads.
Housing Market Forecast | Good for the Rich?
Granted there are still people out there with money, right? So the housing market forecast for upper class homes must be more hopeful, right? Actually no, not the case at all. The housing inventory is so low that there aren’t a lot of attractive properties on the market for the rich and elite either.
Industry executives say shortages of well-priced and attractive homes are a bigger drag on sales than sluggish demand. “As weak as demand is, inventory has been weaker,” said Glenn Kelman, chief executive of Redfin Corp., a Seattle real-estate brokerage firm that does business in 13 states. “Right now, the absence of inventory is the limiting factor on sales volume.” http://online.wsj.com/article/SB10001424052970204774604576631381117760982.html?mod=wsj_share_tweet
I know that there seems that there is really no hope for the housing market forecast, but focusing on the negative aspects of the housing crisis never made anyone any money. If you want to be wealthy and successful as a real estate professional in today’s economy, you must think outside the box. Extraordinary problems require extraordinary solutions.
Housing Market Forecast | The Solution
I have a strategy called Assignment of Mortgage Payment System that focuses on solving the problems of selling ‘unsellable’ houses to ‘unloanable’ buyers that will have you thinking of the glum housing market forecast as a deterrent to becoming an investor no more. Click HERE to sign up for my free video series that will explain how you can provide a solution to the murky housing market forecast and financially benefit while solving other people’s problems.
