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Here's the positive news in real estate quoted from Susan McCormick of Old Republic Title Company:
Positive news for Realtors in '08
NAR economist underlines real estate's silver lining
www.inman.com
In all the years I've been writing this column, I have never received such an
outpouring of response as I did from the two November articles on how media
coverage of negative housing news is hurting our industry.
In spite of gloom and doom of recent news reports on the state of the nation's
housing, there is plenty of good news, the most recent of which comes from the
National Association of Realtors.
Laurence Yun, the chief economist for NAR, had plenty of positive news for Realtors
at last month's conference. Yun attributed much of today's subprime mortgage
problem to greed. Wall Street wanted the 10-12 percent return that subprime
mortgages yielded as opposed to the smaller returns from more traditional mortgage
products. His take on the Wall Street types: "They gambled. They lost."
Yun's outlook for 2008 sees a shift from greedy speculators to serious homeowners.
2008 will be a year of opportunity where there will be serious, healthy business.
Furthermore, Yun predicted that the market returns to normal by 2009.
According to Yun, one of the biggest mistakes that reporters make is talking about
national trends. Nationally, 2007 was the fifth best year ever on record. Home prices
declined about 1.5 percent after a 50 percent run up in prices.
The challenge is that national numbers are pretty much irrelevant. Yun argues that
talking about national averages is about as effective as having a national weather
forecast. Like the weather, all real estate markets are local. In fact, you may have a
buyer's market and a seller's market operating within a single market area based
exclusively upon price point. Here are the other key pieces of positive news from
Yun's economic report:
1. New housing starts: Even though these are dropping, there was too much
building in recent years. The market is simply adjusting to normal supply-and demand
pressures. The inventory is "being controlled which makes stabilization occur more quickly."
2. Foreclosures: According to Yun, the 41 percent increase in foreclosures has
resulted primarily from investor-heavy real estate purchases in Arizona, California,
Florida and Nevada. The majority of these individuals are flippers whose investments
did not payoff. More importantly, the number of foreclosures in Utah, New Mexico,
North Carolina and South Carolina is actually declining.
3. Under-priced markets and superstar cities: Although the coastal markets are
still overpriced, Middle America is under priced. Nevertheless, Yun cites a new trend
termed, "superstar" cities. These cities will command premium prices, regardless of
what the market does. There is so much wealth concentrated in these areas, that
measurements are simply not predictive. In addition to London, Paris, Tokyo and
New York, Yun also identified San Francisco, Miami and Seattle as potential new
superstar cities. {We're in the vicinity of S.F. so watch out when things roll there.--bev}
4. The recovery has started: Other than the three states hit heavily by job losses
in the automotive industry (Indiana, Michigan and Ohio), the states that first
experienced a downturn in the Northeast, are now in recovery. Specifically,
Connecticut, Massachusetts, New York and Rhode Island were the first to feel the
slump and are now well into a recovery. Furthermore, there appears to be a pent-up
demand for first-time buyer properties due to a large number of Gen Ys (born 1977
to 1994) that are now buying their first homes. Falling interest rates will motivate
many of these buyers to step into the market now.
5. New jobs and corporate profits are still strong: Corporate profits are still
strong with companies as diverse as Microsoft and Jack Daniels reporting close to
record profits. Furthermore, the economy has generated 4 million net new jobs and
wages are rising.
6. A weak dollar may harbinger more foreign investment in U.S. real estate
Although the decline of the U.S. dollar will end up costing us more when we go
overseas or purchase imports, it has resulted in more manufacturing jobs returning
to the U.S. It also may mean more foreign investment in U.S. properties as well. Just
a few years ago, the Canadian dollar was only worth 70 cents in U.S. currency.
Today, the Canadian dollar has been hovering at about $1.05 to $1.10 U.S. What
this means is that we can expect more Canadians and Europeans to be purchasing U.S. property, because our prices are approximately 50 percent cheaper than they were just three years ago.
7. Real estate: Still the best shelter: For those agents who represent reluctant
first-time buyers, Yun points to some interesting research from the Federal Reserve.
Between 1995 and 2004, the average renter accumulated $4,000 in wealth. In
contrast, the average homeowner accumulated $184,400. Furthermore, the typical
homeowner holds their property for six years. Within this period of time, NAR's
research shows that approximately 97 percent of the homeowners will have a
positive equity position after that period of time.
Bottom line: 2008 represents the best window that buyers will have to find
excellent deals with excellent financing. Get the word out there. If they
wait, prices and interest rates will be higher and the reluctant buyer may be
forced out of the market.
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Okay folks, you've read it. Today may be the time to act on your property purchase. Call me at 209.601.8441 with your questions OR send a quick e-mail to bevwillard@sbcglobal.net to get started on your loan approval--bevW
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