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This is a two part blog post:
Part one: Is the Great Housing Bust Finally Over?.
Part two: When will homes be worth what they were in 2006-2007?
Part one: Is the Great Housing Bust Finally Over.....?
Expect many conflicting news reports over the next few months about this topic.
What you need to know now....
THE most important issue facing housing is the simple fact that the banks are ‘holding onto’ 5,000,000 homes. Thats 5 million...check the zeros. The so-called 'Shadow Inventory' is coming for sale now. Expect to see the the number of homes for sale more than double between now and late spring 2010...
Allow me to put this into perspective...
NATIONALLY, right now...today.... there are roughly 4,000,000 homes for sale. Once the banks release all of their listings...the national inventory of homes for sale will be...9,000,000 homes! (Yes, you read that correctly...)
Some expect the banks to release all of their inventory between now and the end of the year...to 'get the toxic-asset' homes off their books'. Here is a video from CNBC, what is happening next in housing
Next, adding to the confusion are the expected rising defaults due to the ALT-A mortgages resetting….that means upper-end homes will be going into foreclosures at higher rates than we experienced even with the sub-prime mess. These new distressed listings are not accounted for in the estimates of homes coming for sale. In other words....its going to be more than 9,000,000...
And the big one…Commercial Real Estate. Have you noticed all those commercial vacancies? When these loans start going bad expect to see many more bank failures...
The FDIC has 100’s of banks on their ‘Watch List’. Recently Shiela Biard the chair of the FDIC said she is expecting to see a huge increase in the number of commercial loan defaults. Our commercial broker coaching clients have been telling us that the commercial problem is going to be far bigger…far more significant than what is being reported.
Bottom line, be prepared. Please don't hide your head in the sand and ignore the actions needed to not just survive this market...but, thrive in this market.
Not sure what to do now? (you aren't alone)
If you know that the market is headed towards more foreclosures (and more REO listings as a result) it simply makes sense that you would do whatever it takes to become an REO listing agent as soon as possible.
We have made it easy for you.
Listen NOW to the FREE Replay of the most recent Agent REO Secrets teleconference. This is an intense, 90 minute educational call where you will learn exactly how to become an REO listing agent. Listen NOW.
Now, let me share with you a little good news...
Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September. Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.
These signs — as well as anecdotal reports about house shoppers growing more willing to write a deposit check — have executives at homebuilding firms declaring the worst is over.
“We believe declining cancellations and more solid demand indicate that the housing market is stabilizing,” Toll Brothers chief executive officer Bob Toll said this month in a conference call with investors and analysts.
Haven't we heard all of this before?........
Housing boosters have forecast turnarounds repeatedly since the market peaked in 2006, only to be proven wrong by plunging prices. And skeptics say they’re wrong again now.
They argue that a deeply indebted consumer, a weak job market, expiring incentives and rising foreclosures spell a quick end to any housing rebound.
“We’re entering the phase where the homeowner has to earn his way out of this mess,” said Mark Hanson, who runs a California real estate research firm. “This summer is shaping up as the gateway into the next move down.”
Realtors, did you read that last section? There is a massive…5,000,000 home strong….foreclosure wave coming NOW. Its NOT too late for you to become an REO Listing Agent. Do this, watch the Agent REO Secrets video…next, download the free how-to list REOs book
Part 2:
When Will Homes Be Worth 2006-2007 Values?
Every week we receive literally hundreds of questions from HREU Students…(and future students). We welcome all questions and are happy to help.
(Would you like to schedule a FREE Coaching Call with a Harris Real Estate University coach? Go here now.)
Here is the Question Of The Week:
“Dear Tim and Julie,
In my real estate market homes have depreciated more than 20%….in some markets homes are worth 30%+ less than they were worth only a few years ago! Matter of fact my own home is now worth far less than I paid for it in 2006. Everyday I come across sellers who are in the same position as me. Just today, I met with a seller who was $200,000 upside down in their home. The seller asked me if it made any sense for them to simply..’wait it out’ for the market to come back…
So, my question is..how long will it take for homes to be worth what they were in 2006-2007?….in other words…when will home values truly recover?”
Tim and Julie’s response:
The simple answers are…. years (and never).
As in 10-20 years depending on your market. In some markets the homes will never be worth what they were in 2006-2007. The idea that homes don’t appreciate is a new concept for most of the country. But, the reality is in many parts of the country….there will never be a housing recovery in the true sense of the words. Homes were artificially valued based on once in a lifetime circumstances.
Lets use this recent article from the Orange County Register…using Southern California as an example:
An economist at the Moody’s credit-rating agency has a new report out saying that you better not hold your breath waiting for a quick return to peak pricing for housing in California.
Economist Celia Chen thinks California pricing won’t regain its old peak before 2030. We decided to try to put that into perspective with the help of our trusty spreadsheet and some DataQuick data.
If annual gains were: New peak In months
| 3% |
Oct 2027 |
226 |
| 4% |
Mar 2023 |
170 |
| 5% |
May 2020 |
137 |
| 6% |
July 2018 |
114 |
| 7% |
Mar 2017 |
99 |
| 8% |
Mar 2016 |
87 |
| 9% |
Jun 2015 |
77 |
| 10% |
Nov 2014 |
70 |
| 15% |
Dec 2012 |
48 |
| 20% |
Jan 2012 |
37 |
| 25% |
July 2011 |
30 |
Let’s look at Chen’s call in Orange County terms. If she nails that 2030 prediction, that will mean that local housing will average annual gains of 2.7% percent for the next 21 years from January’s cyclical median-price low of $370,000. Let’s say those are slim profits. Compare that to other historic upticks for Orange County’s median selling price …
- 3.6% — Annualized gain made in the 20 years ended in July. Curiously, price have exactly doubled since July 1989, amid another great buying frenzy that ended badly.
- 8.5% — Annualized gain from the bounce from last cycle’s bottom (January 1996) to new peak (April 1998.)
- 11.7% — Annualized gains generated from the 1996 bottom of the last housing downturn to the June 2007 peak of $645,000!
- 17.6% — Highest average annual return in a 5-year period in DataQuick’s records. (60 months ended March ‘06)
- 20.8% — Highest average annual return in a 3-year period in DataQuick’s records. (36 months ended Feb. ‘05)
Want to make your own prediction, based on expected yearly profits going forward? See the chart at right that mixes annual rates of housing gains and when they rate would bring Orange County back to its June 2007’s peak of $645,000!
Listen NOW to the FREE Replay of the most recent Agent REO Secrets teleconference. This is an intense 90 minute educational call where you will learn exactly how to become an REO listing agent. Listen NOW.
End Of The Great Housing Crash…Time To Pop The Chamapaign Corks?
Breaking News: Case/ Shiller Housing Index Shows Second Month In A Row Of INCREASE IN SALES!
“The animal spirits seem to be coming back,” said Robert Shiller, Yale economics professor and developer of the Standard & Poor’s/Case Shiller Home Price indexes. “The psychology does seem to be changing.”
The national home-price index released on Tuesday rose for the second straight month in June, fueling hopes the housing downturn, which is in its third year, is waning. Still, the index was off roughly 15% in the second quarter from the year-ago period. See Economic Report.
In a teleconference Tuesday, Shiller was reluctant to call a definitive bottom in home prices, saying he’s seeing “conflicting signals” in the housing market.
Well then, I will do it. There is a clear bottom in most housing markets for homes that are less than $200,000. Will this last? I think it will. There first time buyers and investors out there that there won’t be any further significant value decreases for homes less than $200k. Now, with that said, if the ‘First Time Buyer Credit of $8,000′ is not renewed….and if the banks make the mistake of dumping too many foreclosures on the market too fast…all bets are off.
On the positive side, the rise in home prices in May and June is a “sudden break in momentum” from years of nearly steady, punishing declines that may signal a turning point. “The roller coaster is now going up,” Shiller said.
Yet he noted what appeared to be a housing recovery in early 2008 “fizzled” when prices resumed their decline. And a long-term chart of home prices makes it look like “we are still in the process of a bursting bubble.” Shiller expressed “great reluctance” to forecast where prices will go from here with the U.S. economy in the midst of the most severe recession since the Great Depression.
Where will prices go? There WILL BE more depreciation for the more expensive…non first time buyer/ Investor price ranges. In some cases this depreciation will be dramatic. We are predicting that the next wave of foreclosures will force the ‘upper end’ housing markets to lose as much as 30%+ over the next 12-24 months.
“Unemployment looks like a bad indicator for the housing market,” Shiller said.
There are other challenges that could snuff out the nascent revival in home prices. One of the biggest threats is the mounting wave of foreclosures as more strapped borrowers struggle to meet their monthly mortgage payments. The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.
Agents, it is NOT too late for YOU to become a REO Listing Agent. You already know that REOs are THE listings to have in this market. Watch the FREE Agent REO Secrets video now and then grab your FREE How-To list REOs Book.
The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.
IF they don’t renew the buyer credit then YES…we are in trouble. But, they will. And I bet they will increase the ‘$credit’ AND make it available to everyone.
Here is an interesting thought for you….the $8000 buyer credit created demand..in many markets there has been so much demand that agents are selling the less expensive homes in 24 hours. What has this in turn caused…competing offers and increasing prices. So, someone was motivated to buy a home because they were getting a ‘credit’ from the government…they may of thought..”heck yeah I will buy now…I will get $8000 in free money”. As a result of this prices are pushed up. Buyers pay MORE for the home than they other wise would have. So, their $8000 in free money is in essence wiped out by the increase in price they are paying….
Indeed, recent experience has taught homeowners that prices can be very volatile, said David Blitzer, chairman of the index committee at S&P, during Tuesday’s call.
On a national level, home prices are back to levels last seen in 2003, but the cities that saw the biggest run-ups also fell the hardest.
“The idea that they could never go down was wrong,” Blitzer said.
He added the data coming out of the housing market in recent months have been encouraging, but warned against breaking out the champagne just yet. Commenting on so-called shadow inventory, he said many sellers have been waiting for an uptick in house prices to put their homes on the market, Blitzer said. This could exacerbate the supply glut and push a recovery further into the future.
Source: MarketWatch.com
Does Social Networking really work to generate business……..?
Get started now learning how to make money from social networking. Watch the FREE Agent Tech Secrets video now to learn how to get started on Twitter. Watch the Free 30 minute training Video now!
Tim and Julie,
The social networking information you give is PRICELESS!!!
I’m a true believer now of social media and here’s why… I received my first listing phone call today and the gentlemen said….
……”I want you to list my house”…..
….when I asked how he found me, he said….
“I googled for a short sale expert and your name came up.”
Tim and Julie, I would have never got this listing had I not been taken notes from your classes. An easy listing because I COULD be found on the internet!
Many Thanks!
Tamra Simons
Whatever It Takes! No Risk! No Excuses!
Only Specialized Service!
Coldwell Banker Union Heights
7730 Union Park Ave. Suite #600
Midvale, Utah 84047
435-406-1142 Mobile
801-352-2759 Office
www.tamrasimonshomes.com <http://www.tamrasimonshomes.com/>
tamra.simons@utahhomes.com
Popularity: 2% [?]
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Hi Julie,
I have been looking back at this past year and wanted to share with you some more “WOW HREU” realizations!
This is crazy, this is fun, this exciting, this is inspiring, this happened fast, and this only the beginning.
It’s been just about a year since I joined HREU. This time last year I was planning how I wanted the coming year to be and setting goals for life, family, business, financial, vacation and specifically what I wanted to achieve.
Here I am right at the 12 month mark of joining HREU and here are some exciting GOALS that have come to fruition!
So far, by the end of this month I will be well over the 6 figure mark in real estate earnings, listing inventory at 32 (when I set the goal 12 months ago I wanted to be at 30 listings), I work with hand-picked buyer clients, I have a new associate on my team who is doing excellent work, I’m working normal hours-normally 9am-3pm, don’t normally work weekends (I’ve worked 3 weekends this past year and that was by choice to work with close referrals from my sphere who were buyers), got fun little gifts for ourselves when certain deals have closed (iPhone for example), and here is one of the really cool parts for me because I really visualized this….the trips.
The “power vacations” you talked about. This year so far I have taken trips with my wife and kids to: Lake Tahoe, Montana, San Francisco, Payette Lake McCall, and my wife and I took a couples trip to Mexico with close friends. We have also been camping and boating here locally in southwestern Idaho about a half dozen times this summer as well in addition to the above mentioned destinations.
The reason I mention all of the trips is because I visualized that so strongly as part of the new lifestyle I wanted 12 months ago. I had such a strong bead on every aspect of what’s going on in my life and my business right now that it’s mind boggling! My wife and I were laughing the other day saying, “Can you believe how much fun we’ve had this year?!!…and it’s only August!” And we also acknowledged that this is precisely what I visualized and set in motion just 1 year ago!
Holy smokes!
Tim and Julie, this journey, this experience, this success would not be if you and I had not crossed paths and I had not jumped into the HREU short sale program.
Remember, this time last summer I was transitioning out of selling office equipment and photocopiers and getting back into full-time real estate! Success was my destination and you were there with the map! (Let me tell you, the map was really easy to follow and it led right to where you said it would!)
Thank you for the challenges (especially the 20 listings in 45 day challenge..life and career changing) and guidance and constant energy and focus with your morning motivational message, your blog and website and constant up-to-the-minute info on this constantly changing and evolving industry. It has proved to be priceless.
What can I say? A lot apparently  It’s been 1 year and this is only the beginning. I am so excited and so grateful. I am grateful for you, Tim and Julie and HREU. This has been my best year ever in real estate…and it’s far from over!
Sincerely,
Kevin M. Hall
Market Pro RE / Team Hall Properties
Real Estate…Results.
HREU Certified Short Sale & REO Specialist
208-340-2823 PHONE
208-498-6161 FAX
Hello,
As promised….here is the replay of todays Agent Tech Secrets teleconference.
Listen NOW to Agent Tech Secrets Call Replay.
This was a fantastic call…
When you listen to this intense 90 minute call you will hear directly from 3 agents who ARE making money from social networking.This is the information you need to get started online.
Topics we covered on this call:
1) How to convert real…honest to God…closed sales from social networking. Many agents are ‘on-line’ but, very few have discovered the secret sauce to make money. Listen now and you will directly from 3 agents who ARE making money from sites like Twitter, Facebook and Linkedin.
2) When you listen now you will discover the 6 ways agents screw-it-up online. We give you the DOs and most importantly the DONT’s!
Listen NOW to Agent Tech Secrets Call Replay.
3) For many agents trying to put all the pieces of the ’social networking puzzle’ together results in time wasting frustration. Listen now to this call replay as we give you the picture of what your puzzle should look like AND we will help you put it together.
5) Many agents are frustrated because they don’t know where to start online. They are confused about what social networking sites are important and the sites they should avoid. Listen now as we share with you the sites that matter now.
6) Perhaps most importantly, we will tell you how to make ‘contacts’ online…next, how to make those contacts into listings and buyer sales…YES, you will hear directly from 3 agents their exact real life examples of how they are making money from Social Media. (get this, one agent has listed and sold nearly 70 homes directly from social media…)
Go ahead and click this link to listen now to the replay:
Listen NOW to Agent Tech Secrets Call Replay.
Speak with you soon!
Tim
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Hello,
One of the most popular programs at Harris Real Estate University is our exclusive…
Free Superstar Interviews.
Every week we hand select a real estate mover and shaker to be featured for the hour long interview.
You can listen to past Superstar Interviews here.
Listen NOW to the Russell Shaw interview…
http://instantTeleseminar.com/?eventid=8516370
Who is Russell Shaw and why should you listen to this interview now?
1) Russ is one of the nations top selling agents…selling 400+ homes per year.
2) Russ has been recognized as being a true innovator in the real estate industry. Most notably, Gary Kellers best selling book “The Millionaire Real Estate Agent” was based largely on Russ’s business.
3) Russell is in one of the hardest hit real estate markets in the country and despite that he is succeeding. Learn directly from him what is working now…and what he has complete stopped doing.
4) We will discuss what Russ sees as the idea real estate business and business model. Hint: significantly different from 24 months ago.
5) For those of you who want to build a team…you will want to attend this interview. Russ personally goes on NO listing presentations and works with NO buyers. Learn how he has built his team…and what he is changing to adapt to this new real estate market.
If you have ever heard Russ speak before you know the one thing you can expect is the unexpected.
Here is the information for your schedule:
Listen to the REPLAY of the interview NOW:
http://instantTeleseminar.com/?eventid=8516370
Speak with you soon!
Tim and Julie Harris
HREU, Co-Founders.
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