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Feb 12, 2009 -- Housing recovery to start by the end of 2009?
We're just now getting our first clear indicators that recovery may be coming in the housing market.
New polling data from Harris/Zillow.com finds 57% of homeowners acknowledge that their own home has declined in worth. That's a major shift in perception. We're finally starting to lose the irrational attitude that our house has retained its value but our neighbor's home has not.
Meanwhile, Economy.com is predicting that housing is going to reach a bottom in most markets around the country by the end of 2009.
The single hardest hit market in the United States has been Naples, Florida. When things do finish bottoming out, home values in that town will be 70% below their peak. That explains why Obama went to Southwest Florida to rally support for the stimulus plan.
Likewise, Miami home values are worth two-thirds of what they were at their peak. Phoenix is at 56% of its peak and Las Vegas is at 53%.
Keep in mind that when recovery does come, it will be a gradual process.
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
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What others are saying
banks
homes are dropping out of escrow because although buyers are willing to pay the price, the banks are appraising them much lower and will not grant a mortgage......so?
Sydney (true value) is correct because..
the true value of a home is what someone is willing and able to pay for it. The key word going forward is "able;" we had several years where "willing" was all that mattered and that is what created the bubble.
True value
Optimism and pessimism aren't really relevant. What matters is whether home values still remain higher than historical objective measurements of affordability. One good one to watch is the relationship between the median house value and median income. The house price should be roughly 2-3x income for a given area - if it is 4x or more as it has been in many markets, the prices are unsustainable and still overvalued. Another is what the house would rent for vs. the purchase price. A fair market rent amount should not be wildly out of sync with a mortgage payment - for ex, if a house costs $4,000 a month to own and $1,500 to rent, as was the case in many areas during the bubble, watch out. Once these kind of measures are back in line - or better, begin pointing to undervaluing of homes rather than overvaluing - we will see the real estate market stabilize and recover.
Sunny side up? Get real Dave54
Dave54, there is a time for optimism but unfortunately that time is not now. We are in a depression, and the only cures for a depression are the depression or a war. Let's hope Obama doesn't go for the latter. That leaves us with toughing it out and clearing away the tens of trillions worth of bad investments and a general repricing of all assets to sustainable values.
Now that kind of talk doesn't make real estate people happy, or help folks who overpaid for their house last year, but it's the truth. Americans have been denying the truth for over a decade, the reckoning is here. Invest in real estate at your own peril.
when would be a good time to buy
By the truth - I think your decision is a wise one. There is no rush. Take your time and don't be pushed into making a decision. Six months down the road won't make that much difference.
when would be a good time to buy
I am the sole provider for my family of four. I have good paying job for the state. I originally had intended on purchasing home in summer, but the state is contemplating furloughs or even layoffs. With this uncertainty, i have decided to sign another six month lease on my apartment and wait till november or december to purchase home. Good decision? Just want some unadulterated feedback.
houses are starting to sell
Houses are starting to sell in my middle class neighborhood. One recent buyer, a school teacher, said that she couldn't have afforded a house last year, but since the prices came down, she could now buy a house! She didn't buy a foreclosure either. We're glad to her as a neighbor
The other side of the coin
We bought our home 2 years ago for $253,000. We have just sold it FSBO for $270,000. We did do about $10,000 of improvements since we bought. We are looking for a house now in the next town. The good news is prices are great. The bad news is that very few houses are on the market now. People are waiting for a rebound and not selling. We can't find a place to buy! We will have to rent until the market picks up again.
It is a problem that I didn't see coming!
See the dawning day
Jeez, you doomsayers are self-fullfilling negatories. People need to have a future, guys, a better tommorrow, and all we hear is bad, bad, bad. Clark simply is reading the real estate tea leaves, and on this one he is probably right. Quite watching msnbc night and day, and roll with the punches.
Economicy bottom recovery
We are hitting the bottom in the third quarter, so that means the worst is yet to come....how is that a recovery in 2009 ?
Clark is smokin' rope again
The alt-A and commercial real estate crashes haven't even begun, and Clark is talking about a recovery? LOL
We're in a depression Clark, and nobody has a magic wand that will make it go away anytime soon. I wouldn't invest any money in real estate before 2012.
Great News!
Housing was way too expensive. Now its affordable. Some great things are coming out of this downturn.
