Home Sales and You: The Tipping Point
Posted by James McNabb | Visited 340 times, 1 so far today | Currently 1 Comment »
Real estate expert Dr. Lawrence Yun says “S.D. at leading edge of recovery?”
Do you believe that? Well, I attended the REGIONAL REAL ESTATE SUMMIT on August 18, 2009 at the Double tree Hotel in Mission Valley. The presentation was given by Dr. Lawrence Yun, National Association of Realtors chief economist.
Did he really say we were at the leading edge? Well not in so many words. That headline was in the Union Tribune on the morning of August 19th. So what did Dr. Yun discuss? I will give you some highlights that I took away from his presentation.
To begin with he did say we have been in a 4 year recession. He went on to say that he used to think there would not be a real estate bubble. In a way there wasn’t, but there was a credit market bubble that let almost everyone buy an expensive home when they shouldn’t have been able to. He stated that now, buyers are coming back to the market and the San Diego area has had 5 consecutive months of increased sales.
Have any of you read the book, The Tipping Point by Malcolm Gladwell? It contains numerous discussions of how different businesses and fashion trends emerge and become very successful. Gladwell talked about everything from “Hush Puppies” (shoes for those of you who never wore them) to “Sesame Street” as examples of how a trend had emerged into a great success. In that same way, Dr. Yun indicated that Southern California might be at a tipping point and that the pent up demand for housing might just lead to a significant rise in housing sales in the near future. Not that we are out of the woods at all because there are still a large number of unsold foreclosures that can easily take another year to clear out. Dr. Yun pointed out that there are plenty of buyers out there for the distressed properties, so their numbers will go down and this should result in less competition for conventional sellers. But the speaker did give us one significant word of caution, namely that rates could rise to the 6% or greater level in 2010 due to all the inflationary pressures that are on the horizon.
So what does all this mean? If Dr. Yun’s projections are correct then:
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This is a “good” time to buy because home prices are near or at the bottom of what has been a long decline.
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Selling prices should stabilize and recover but it will be slow.
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Interest rates should rise during 2010 and could reach 6% or more.
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We are seeing a cautious economic recovery and it may be at a “tipping point”.
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The job market will not recover until 2010.
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There could be a new home housing shortage soon.
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Up to 50% of all sales are distressed properties, but that should change during 2010.
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Locally, housing inventory is near 2 & 1/2 months, down from over 5 months one year ago.
You might want to read the Wednesday August 19, 2009 article in the San Diego Union by Roger M. Showley because he covered the same conference for the paper. His article contains additional information that I did not discuss. But if you don’t have a copy we can provide one, just let us know. And if you wish to discuss this further give the McNabb team a call.
The McNabb Team
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Jim,
Great post! Good info and a great way to present it! Thanks for being so insightful! Steve